The Rekha Gupta-led Delhi government on Saturday reduced the value added tax on aviation turbine fuel (ATF) from 25% to 7%, according to officials. This comes after the Maharashtra government introduced a similar move, reducing VAT from 18% to 7% for six months starting May 15. The decision comes at a time of global fuel market volatility caused by the ongoing war in West Asia.
The decision was approved in a cabinet meeting presided over by Chief Minister Gupta, according to an official statement.
“The Delhi government has decided to reduce the value added tax (VAT) on aviation turbine fuel (ATF) from the existing 25 percent to 7 percent, a move that is likely to benefit airlines as well as common passengers,” PTI quoted an official statement as saying.
Maharashtra cuts VAT on ATF to 7%
“The concession will remain in effect from May 15 to November 14, after which the previous rate would apply unless extended or amended by the government. The amendment replaces the existing 18 per cent tax rate with 7 per cent in Item 6 of Schedule B appended to the Maharashtra Value Added Tax Act, 2002,” the notification said.
The decision was officially announced by the state finance department on May 14 under the Maharashtra Value Added Tax Act, 2002. Officials said the reduction in VAT should reduce jet fuel costs for airlines and may also improve air connectivity while increasing the competitiveness of airports in the state.
Small scale industries in MP are calling for rate cuts amid high VAT on PNG
Meanwhile, micro, small and medium enterprises (MSMEs) in Madhya Pradesh on Wednesday called for a reduction in the 14% value added tax (VAT) levied on natural gas (PNG) used for industrial purposes in the state, PTI reported.
Industry bodies said rising fuel prices due to the crisis in West Asia have increased production costs for MSMEs, while PNG’s high VAT puts them at a competitive disadvantage compared to businesses in neighboring states.
The issue was highlighted at the Goods and Services Tax (GST) Grievance Redressal Committee meeting held in Indore, where the Madhya Pradesh Industries Association highlighted concerns over PNG’s high industrial use tax.
“Fuel prices have already increased significantly due to the crisis in West Asia. The 14 percent VAT on PNG for industrial use in Madhya Pradesh is putting a heavy burden on the production costs of SMEs. Due to the high VAT, MSMEs in Madhya Pradesh are lagging behind in their competitiveness compared to enterprises in neighboring states,” association president Yogesh Mehta said while talking to an association spokesperson.
He further said that in neighboring states, the VAT on Pipeline Natural Gas (PNG) for industrial use is between 3 and 5%.
Mehta noted that since PNG is currently exempt from GST, industries cannot claim input tax credit on its purchase.
The GST Grievance Redressal Committee meeting was attended by representatives from industry and the business community along with tax officials from both the central and state governments. Industry stakeholders have also reportedly urged the authorities to simplify and streamline the GST return filing process.
