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NEW DELHI: Jet fuel or ATF prices were Thurs­day cut by 2.6 per cent fol­low­ing the gov­ern­ment de­ci­sion to lower ex­cise duty on the fuel.

Avi­a­tion tur­bine fuel (ATF) is now cheaper than petrol and diesel.

ATF in Delhi was cut by Rs 1,962 per kilo­litre, or 2.6 per cent, to Rs 72,605 per kl (Rs 72.6 per litre), ac­cord­ing to a price no­ti­fi­ca­tion is­sued by state-owned oil firms.

It costs Rs 72,225 per kl in Mum­bai, down from Rs 74,177.

Even at the re­duced price, ATF is at its high­est level since March 2014.

The gov­ern­ment had Wed­nes­day cut ex­cise duty on jet fuel to 11 per cent from 14 per cent pre­vi­ously to give re­lief to the avi­a­tion in­dus­try that has been in re­cent weeks hit hard by ris­ing fuel prices and plum­met­ing ru­pee.

The move came af­ter jet fuel prices this month hit their high­est level since Jan­uary 2014. Rates had risen by 9.5 per cent since July, and over 58.6 per cent since July last year.

While the ATF has been cheaper than petrol be­fore, the fuel used in aero­planes is cheaper than even diesel now.

Petrol in Delhi costs Rs 82.36 per cent and diesel is priced at Rs 74.62.

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 VAT by an equal pro­por­tion to give cus­tomers hit by high auto fuel prices a re­lief of about Rs 5 per litre.

While the twin moves on auto fu­els had led to a drop in price of petrol from a record high of Rs 84 per litre to Rs 81.50 in Delhi and that of diesel from an all-time high of Rs 75.45 to Rs 72.95 a litre on Oc­to­ber 5, rate hikes on sub­se­quent days have pushed prices up­wards.

Petrol has risen by 86 paise per litre since then and diesel by Rs 1.67, negat­ing the en­tire ex­cise duty re­duc­tion in less than a week.

Petrol in Mum­bai costs Rs 87.82 per litre and diesel is priced at Rs 78.22.

The ex­cise duty cut on ATF came af­ter the gov­ern­ment’s move to raise cus­toms duty on the fuel and 18 other non-es­sen­tial im­port items last month, in a bid rein in cur­rent 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.

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 (GST) 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 avi­a­tion tur­bine fuel (ATF) -were kept out of its purview for the time be­ing.

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