Tarun Kapoor, Advisor to the Prime Minister's Office (PMO), has stated 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. 

Speaking to CNBC-TV18, Kapoor confirmed that discussions are underway to implement this shift, which has been a long-standing demand from various sectors, especially aviation and energy.

Currently, ATF and natural gas fall outside the GST regime and are subject to state-level taxes, including excise duty and value-added tax (VAT). These taxes vary across states, significantly increasing operational costs for industries such as airlines, which have long sought uniformity in taxation. For instance, ATF can attract VAT rates as high as 30% in some states. 

The inclusion of ATF and natural gas under GST would simplify the tax structure and potentially reduce the overall burden on these sectors.

This move aligns with the government's broader push towards rationalising taxes on essential resources and commodities. There have been previous discussions and proposals to bring these fuels under the GST, with Petroleum Minister Hardeep Singh Puri also remarking on the issue earlier. 

In recent statements, Puri noted that including ATF and natural gas under GST would be a “win-win” for both the government and industries, as it would enhance tax compliance and streamline costs.

In addition to the GST plans, Kapoor highlighted that efforts are underway to introduce a new policy for small hydropower projects soon.

Hydropower projects below 25 MW fall under the jurisdiction of the Ministry of New and Renewable Energy (MNRE), while larger projects are handled by the Power Ministry. The new policy aims to boost small hydel projects, further contributing to India's renewable energy goals. 

These reforms are part of the government’s ongoing initiatives to streamline the energy and power sectors, making them more efficient and cost-effective for both industry players and consumers.

While the inclusion of ATF and natural gas under GST would be a welcome move for industries, it has faced resistance from several state governments. These states are concerned about potential revenue losses, as petroleum products form a substantial part of their income. 

States like Kerala and Tamil Nadu have previously opposed such measures, fearing losses of thousands of crores in annual tax revenue. This resistance has been a key factor in delaying the inclusion of ATF and natural gas under the GST umbrella​.

Source: CNBC TV 18