New Delhi: Aviation Turbine Fuel (ATF) may soon be brought under the ambit of Goods and Services Tax (GST), Union Petroleum and Natural Gas Minister Hardeep Singh Puri said. This move could significantly reduce the cost burden on airlines, as ATF constitutes nearly 40 per cent of their operational expenses.
Speaking at the curtain-raiser press conference for India Energy Week 2025, Puri said, “Our sense from the last GST council meeting was that ATF is likely to come (under GST) soon. But bringing natural gas under GST is very much on the cards. There are a large number of states which earlier had reservations, like Gujarat, Maharashtra, and Andhra Pradesh, but they have more or less seen the benefits of that.”
Current tax structure for ATF
ATF currently attracts an 11 per cent central excise duty. For routes under the regional connectivity scheme (RCS), a concessional rate of 2 per cent is applicable. In addition, value-added tax (VAT) is levied by states at rates that vary significantly. For instance, in Delhi, the VAT on ATF is 25 per cent, while in Andhra Pradesh, it is as low as 1 per cent for RCS routes.
As ATF is not included in the GST framework, a cascading tax effect occurs. Producers of jet fuel cannot claim input tax credit on GST paid for inputs such as refining and production equipment, leading to higher overall costs. The cascading tax burden ultimately impacts airline operations and ticket prices.
Price trends in ATF
As of January 1, 2025, the price of ATF in Delhi stands at ₹90,455.47 per kiloliter, reflecting a 1.52 per cent decline from December prices. In Mumbai, ATF is sold at ₹84,511.93 per kiloliter. These prices were reduced after consecutive hikes in November and December.
Natural Gas under GST
The government is also considering the inclusion of natural gas under GST. According to Puri, this move has gained traction with states like Gujarat, Maharashtra, and Andhra Pradesh, which initially opposed it, now recognizing its benefits. If implemented, the inclusion of natural gas would simplify the tax structure and reduce production costs in industries reliant on gas.
Fiscal support for oil companies
Addressing concerns about fiscal support for state-run oil marketing companies (OMCs), Puri said, “Last time they had an under-recovery of ₹28,000 crore, we compensated them through the finance ministry for ₹22,000 crore. I can’t respond in a definitive way, but I can tell you, I see no reason why we wouldn’t want to do it again.”
OMCs incur under-recoveries when selling subsidized LPG at prices lower than the market rate. The government’s financial support helps offset these losses, ensuring continued supply to consumers.
India Energy Week 2025
The press conference also highlighted the upcoming India Energy Week (IEW) 2025, scheduled from February 11-14 in New Delhi. The event will witness participation from energy ministers and deputy ministers of over 20 countries. CEOs of 90 global energy companies are also expected to attend.
The conference will host 10 country pavilions, including those from the US, UK, Russia, Japan, Germany, and the Netherlands. It will feature eight thematic zones focusing on hydrogen, renewables, biofuels, petrochemicals, and other energy-related themes.
On the sidelines of the event, a ‘Clean Cooking Ministerial’ will be held to emphasize India’s role in ensuring access to sustainable and affordable energy solutions. According to an official statement, “The conference will focus on energy security, equitable transitions, collaboration, and digital advancements, reinforcing India’s commitment to global energy equity.”
