The government has cut the excise duty on aviation turbine fuel from 14 percent to 11 percent, according to a notification.
The tax reduction will be effective from Oct 11, the notification said.
Aviation turbine fuel—which comprises a third operational expenses of airlines—is taxed at around 40 percent, which includes both central and state government levies.
Since 2014, excise duty on aviation turbine fuel has been hiked from 8 percent to 14 percent.
Abhishek Jain, an indirect tax partner at EY India, termed the move a “sigh of relief” for the aviation industry. “The increased costs on account of basic customs duty should be offset to an extent by the excise duty rate cut.”
Recently, the government increased basic customs duty on aviation turbine fuel from 0 to 5 percent, which was seen as a major setback for Indian air carriers.
Airlines in India used aviation fuel worth Rs 30,000 crore in the year ended March 2018, a government official had earlier said, adding that carriers imported fuel worth only Rs 1,100 crore last year.
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