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The govern­ment has cut ex­cise duty on jet fuel to 11 per cent to give relief to the avi­a­tion in­dus­try that has been in re­cent weeks hit hard by ris­ing fuel prices.

AF­TER petrol and diesel, the govern­ment on Wed­nes­day cut ex­cise duty on jet fuel to 11 per cent to give relief to the avi­a­tion in­dus­try that has been in re­cent weeks hit hard by ris­ing fuel prices and plum­met­ing ru­pee.

Ex­cise duty on avi­a­tion tur­bine fuel (ATF) has been re­duced to 11 per cent from 14 per cent with ef­fect from Oc­to­ber 11, a no­ti­fi­ca­tion is­sued by the rev­enue de­part­ment in the fi­nance min­istry said. Jet fuel prices this month hit their high­est level since Jan­uary 2014 as ris­ing in­ter­na­tional oil prices and plum­met­ing ru­pee value pushed rates.

The fuel in Delhi cur­rently costs Rs 74,567 per kilo­litre (Rs 74.56 per litre) and in Mum­bai, it is priced at Rs 74,177 per kl.

ATF prices, which cur­rently are cheaper than petrol and diesel in Delhi, have since July spiked up by 9.5 per cent. They have been on up­swing since July last year, ris­ing ev­ery month ex­cept in July 2018. Jet fuel was priced at Rs 47,013 per kl in July last year and has risen by 58.6 per cent since then.

Just last week, the govern­ment had cut ex­cise duty on petrol and diesel by Rs 1.50 per litre and asked state-owned oil firms to sub­sidise the fuel by an­other Re 1 a litre. That step was matched by BJP-ruled states cut­ting lo­cal sales tax or VATS by an equal pro­por­tion to give cus­tomers hit by high auto fuel prices a relief of about Rs 5 per litre.

The avi­a­tion in­dus­try has been seek­ing lower taxes to help off­set the im­pact of high oil prices. Among oth­ers, Ajay Singh of Spicejet had voiced con­cerns over ris­ing in­ter­na­tional oil prices and asked the govern­ment to take up some pol­icy mea­sures to help the in­dus­try.

Un­con­firmed re­ports that the govern­ment an­nounced the ex­cise duty cut af­ter seek­ing ap­proval of the Elec­tion Com­mis­sion as the model code of con­duct came into force on Satur­day af­ter an­nounce­ment of polls in states like MP and Ra­jasthan. Just last month the govern­ment had raise cus­toms duty on ATF and 18 other non-es­sen­tial im­port items in a bid rein in cur­rently ac­count deficit and shore up the ru­pee.

Ba­sic cus­toms duty of 5 per cent was im­posed on ATF. It pre­vi­ously at­tracted nil duty. This led to an in­crease of Rs 2,000 per kl in prices. While the twin moves on auto fu­els had led to price of petrol drop from a record high of Rs 84 per litre to Rs 81.50 in Delhi and that of diesel to all-time high of Rs 75.45 to Rs 72.95 a litre on Oc­to­ber 5, rate hikes on sub­se­quent days has pushed prices up­wards. Petrol now costs Rs 82.26 per litre and diesel to Rs 74.35.

The govern­ment had in 2016 hiked ex­cise duty on ATF to 14 per cent from 8 per cent. ATF like petrol and diesel is not cov­ered by the goods and ser­vices tax regime that on July 1 last year amal­ga­mated 17 dif­fer­ent cen­tral and state taxes.

The cen­tral govern­ment cur­rently charges 14 per cent ex­cise duty on ATF. On top of this, states charge up to 30 per cent sales tax or VAT – Odisha and Ch­hat­tis­garh have 5 per cent VAT while Tamil Nadu taxes ATF at 29 per cent, Ma­ha­rash­tra and Delhi at 25 per cent and Kar­nataka at 28 per cent.

When the GST was in­tro­duced on July 1 last year, five com­modi­ties – crude oil, nat­u­ral gas, petrol, diesel, and ATF – were kept out of its purview for the time be­ing.

Dur­ing the day, avi­a­tion stocks were in high de­mand on Wed­nes­day, surg­ing up to 8 per cent amid re­ports of a likely cut in ex­cise on ATF.

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