Centre to bring ATF inclusion in GST for discussion in next Council meet: FM Nirmala Sitharaman

The Centre will move the issue of bringing aviation turbine fuel (ATF) under the GST net for discussion in the next meeting of the GST Council, Finance Minister Nirmala Sitharaman said on Sunday, while noting that rising global fuel prices are a “concern”. When the GST was introduced on July 1, 2017, amalgamating over a dozen central and state levies, five commodities of crude oil, natural gas, petrol, diesel and ATF were kept out of its purview given the revenue dependence of the central and state governments on this sector.

Sitharaman, in a post-Budget discussion with industry chamber Assocham, said a final decision of inclusion of ATF in GST will be taken by the Council, which comprises finance ministers from central and state governments.

“It is not with … (the Centre) alone, it has got to go to the GST Council. The next time we meet in the Council, I will put it on the table for them to discuss it,” she said. The next meeting of the Council is expected by either in end-February or in March.

Sitharaman was responding to views expressed by SpiceJet Founder Ajay Singh where he sought the support of the Union finance minister in bringing ATF under the GST regime.

“Oil is at USD 90, the rupee is at 75 to a dollar and, therefore, the civil aviation sector has become chronically ill. Your kind support (in bringing ATF into GST) in this process will be extremely helpful,” Singh said.

Currently, the central government levies excise duty on ATF while state governments charge VAT. These taxes, with excise duty, in particular, have been raised periodically with rising oil prices.

Including oil products in GST will not just help companies set off tax that they paid on input but will also bring about uniformity in taxation on the fuels in the country.

“Of course just not for the airline but the global price of fuel is now a concern for all of us, more so for airlines which have not seen a complete head-up post the pandemic,” Sitharaman said.

She said she will speak with the banks to see what best can be done for the airline sector. “You also spoke about the industry status to be given so that it can help attain better banking assistance. I will have a word with banks on that,” she said.

Singh in his remark had said banks instead of being supportive to stressed sectors are withdrawing facilities from these sectors. “So, I request that there should be a message of support from the government.

“If for a period of 2/3 years these sectors could be put under priority lending or infra category that would help because today the banks are not there when we need them, they are in sectors which are doing well and that’s creating a great deal of stress,” Singh added.

In her response, Sitharaman said, “There are serious problems for you, I understand. Just as we were thinking that the airline industry is going to revive we had Omicron come in and more than anything else states being very, very cautious have brought in again severe restrictions in movement of people and…internationally too the quarantine requirements are really hurting the airline industry just at a time when you are likely seeing a revival”.

With regard to issues faced by the renewable energy sector, the minister said there is a need for more coordination between the states and the Centre and the difficulties that the sector faces because of legacy problems will be addressed first so that more investments can be attracted.

“There are still very entrenched problems in this sector and that is what we are trying, layer by layer, to clear and the power minister is working together with all of us.

“Hopefully, the difficulties that the sector faces because of legacy problems we will address that and get that cleared out of the way so that futuristic finance and possibilities for better partnership can be worked out. This is not going to be long drawn. We would like to quickly sort this out,” Sitharaman said.

She said the power ministry is already working with the states to sort out the energy sector problems so that the commitments given in Glasgow by the Prime Minister are honoured.

In his address at the COP26 in Glasgow in November, Prime Minister Narendra Modi had announced a bold pledge that India will achieve net-zero carbon emissions by 2070 and asserted that it is the only country that is delivering in letter and spirit the commitments on tackling climate change under the Paris Agreement.

In his address at the Assocham post budget conference, ReNew Power Chairman and CEO Sumant Sinha said the boldest step was allocating Rs 19,500 crore in the Budget for the solar PLI scheme. It will position India as a great alternative manufacturing destination to China, he said.

“I would suggest creation of a domestic carbon market, because if we really want to move forward on penalizing corporates and the people who consume carbon, then I think it would be really good to have a price on carbon,” Sinha added.