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India: Excise Duty on ATF reduced

November 26, 2018

www.india.gov.in

Miracles of science and technology has revolutionized our life by replacing the requirement of industrious human effort with mechanized apparatus. One of the greatest achievements in this regard is growth of the transportation sector which allows transport of goods and services over vast geographic separations. Various modes of transport including motor-bikes, cars, trucks, trains, ships, airplanes, have facilitated the travel. The innovative intellect of human minds has made it possible to cover huge distances by piercing the sky.

Air travel

Once merely a dream, travel via air is now a reality. Its been a long way from the development of hot air balloons in the 18th century and first powered flying machine crafted by the Wright brothers in the early 1900s to the modern day well equipped defence fighter jets and luxurious airplanes for passenger travel. Attributable to Government promotion schemes and easier accessibility to new technologies, the Indian civil aviation industry has seen a vast improvement. It has emerged as one of the fastest growing industries in the country attracting a number of passengers opting for frequent air travel. India is expected to become one of the world’s largest domestic civil aviation market in the coming years.

Challenges

Various challenges faced by the aviation industry due factors like depreciating value of rupee that adds to aircraft lease rents, maintenance costs for ground handling, parking charges abroad and increasing competition in the market space. One of such issues is the higher price of aviation turbine fuel due to higher rate of excise duty over the same.

Government measures

In order to provide relief to the aviation industry of the nation already being confronted by elevated crude oil prices, the Government, vide its notification dated October 10, 2018, reduced the excise duty applicable on aviation turbine fuel from 14% to 11%.[1]

Excise duty is the tax levied on manufactured goods which is imposed at the time of manufacture. The said rates for aviation turbine fuel were increased from 8% to 14% in March 2014 which caused great hardship to the industrialists in the aviation domain.

This step of the Government to ease the rates for aviation turbine fuel acts in furtherance to its aim to take flying to the masses by making it affordable and convenient,  establish an integrated eco-system which will lead to significant growth of  the civil aviation sector  to promote tourism, employment and balanced regional growth, enhance regional connectivity through fiscal support and infrastructure development and  enhance ease of doing business through deregulation, simplified procedures and e-governance.

[1]http://www.cbic.gov.in/resources//htdocs-cbec/excise/cx-act/notifications/notfns-2018/cx-tarr2018/ce22-2018.pdf;jsessionid=E6AFABDA4F2D660759471F0AED475AEB

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