On October 1, oil companies lowered the prices of aviation turbine fuel (ATF) for the second month, cutting them by almost Rs 6,000 per kilolitre.

Jet fuel prices went down for the second month in a row in October. This affects Indian airlines a lot, as up to 40% of their costs are from jet fuel.

In Delhi, the jet fuel price decreased to Rs 87,597.22 per kilolitre from Rs 93,480.22, a decrease of Rs 5,883. The city’s jet fuel cost is now Rs 90,610.80 per kilolitre, down Rs 5,687.64 from Rs 96,298.44.

Oil companies also cut the price of jet fuel in Mumbai to Rs 81,866.13 per kilolitre from Rs 87,432.78, a reduction of Rs 5566.65. Chennai saw the biggest drop of Rs 6,099.89, with ATF now costing Rs 90,964.43 per kilolitre, down from Rs 97,064.32.

These changes are important for Indian airlines, as jet fuel costs are a big part of their expenses. The price of ATF is revised on the first of every month based on the average international benchmark and foreign exchange rates. It has to be seen if the lower jet fuel costs lead to cheaper air tickets.

In addition, in September, Tarun Kapoor, Advisor to the Prime Minister’s Office (PMO), said that the government is working to bring aviation turbine fuel (ATF) and natural gas under the Goods and Services Tax (GST) regime within this financial year.

Kapoor confirmed that discussions are ongoing to make this change, which has been requested by various sectors, especially aviation and energy, happen.

ATF and natural gas are not currently part of the GST regime and are subject to state-level taxes, including excise duty and value-added tax (VAT). These taxes vary across states, making it more expensive for industries like airlines. For example, in some states, ATF can have VAT rates as high as 30%.

Bringing ATF and natural gas under GST would simplify the tax structure and reduce the overall burden on these sectors.

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