Airlines Urge Centre to Bring Jet Fuel Under GST, Seek Cost Relief

India's leading airlines have urged the Central government to bring Aviation Turbine Fuel (ATF) under the Goods and Services Tax (GST) regime, saying the move would help lower operating costs and provide crucial relief to an industry facing mounting financial pressure.

The Federation of Indian Airlines (FIA) , which represents Air India, IndiGo and SpiceJet , has written to the Ministry of Civil Aviation , requesting that ATF be taxed at 5 per cent GST with full Input Tax Credit (ITC) benefits. The industry body said such a reform has become increasingly important as airlines battle soaring fuel prices and a difficult global operating environment.

At present, states levy excise duty and Value Added Tax (VAT) on ATF, making aviation fuel one of the largest expenses for carriers. According to the FIA, fuel costs, which traditionally account for 30-40 per cent of airline operating expenses, have now climbed to nearly 55-60 per cent .

The federation attributed the sharp increase to escalating geopolitical tensions in West Asia , continuing airspace restrictions , and the depreciation of the Indian rupee , all of which have significantly increased the financial burden on airlines.

In its letter sent last month, the FIA also highlighted a steep rise in other operating expenses. These include higher prices of polymers, petrochemicals, engineering materials, airport services, logistics , and various fuel-linked inputs essential for airline operations.

The industry body warned that the combined impact of these rising costs has created financially unviable operating conditions for Indian carriers at a time when the aviation sector is already navigating global uncertainties.

Calling the current situation extraordinary, the FIA urged the civil aviation ministry to take up the matter with the relevant ministries and stakeholders and facilitate the inclusion of ATF under the GST regime at the earliest.

According to the federation, bringing ATF under GST with full ITC benefits would improve cost efficiency, reduce the tax burden, enhance airlines' financial sustainability, and strengthen the competitiveness of India's aviation sector amid persistent global economic and geopolitical challenges.