Centre imposes ATF levy amid fuel tax shake-up
What's the story
In a major overhaul of fuel taxation, the Finance Ministry has introduced a new levy on aviation turbine fuel (ATF). The move comes with a reduction in special additional excise duty on petrol from ₹13 to ₹3 per liter and diesel from ₹10 to nil. The changes are part of a larger revision of fuel export and taxation rules.
Levy details
Effective levy at ₹29.5 per liter under certain conditions
The new structure imposes a headline special additional excise duty of ₹50 per liter on ATF. However, this is offset by exemptions, bringing the effective levy down to about ₹29.5 per liter under certain conditions. The gazette notification implementing these changes has come into effect immediately and is part of a broader revamp of fuel export and taxation rules.
Exemption details
Exemptions for domestic use and neighboring country supplies
ATF for domestic use is fully exempt from this additional duty, but the exemption doesn't apply to exports except when supplied to neighboring countries. For export or supply to foreign-going aircraft, ATF is fully exempt from basic excise duty. On imports, ATF is fully exempt from additional customs duty equal to the excise levy, ensuring parity in tax structure.
Export changes
Export-linked exemptions tightened for key petroleum products
Along with the duty changes, the government has also tightened export-linked exemptions for key petroleum products such as petrol, diesel, and ATF. Exports of these fuels will no longer get broad-based relief under existing excise provisions except in clearly defined cases. This is a departure from earlier frameworks where export-oriented clearances often enjoyed wider exemptions.
Exemption protection
Targeted exemptions included in the notification
The new notification also includes targeted exemptions. Supplies made by public sector oil companies to neighboring countries such as Nepal, Bhutan, Bangladesh, and Sri Lanka will continue to get preferential treatment. Shipments already cleared or approved for export before the notification are likely to be shielded from retrospective duty impact, providing relief to exporters with existing commitments.