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Hike in customs duty on ATF; air fares likely to go up

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Indian citizens may have to face costlier flight tickets as the customs duty on the aviation turbine fuel (ATF) used by airplanes has been hiked by 5%.

The Finance Ministry, on Wednesday, 26th September 2018, declared a hike in customs duty on 19 items, through a release. This measure was taken in order to curb the growing current account deficit (CAD).

The airlines will have to shell out Rs 2,000 per kilolitre from Thursday onwards, owing to the 5% hike in basic customs duty, against the Rs 1,905 earlier. Following which, a hike in the air fare is expected from the airlines. The airline industry indicated that the prices could go up in the month of October, 2018.

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The government has increased duties on items such as air-conditioner, refrigerator, washing machine, footwear, furniture fittings, tableware, speakers, diamonds, radial car tyres, etc. that fall in the list of the 19 items that accounted for an import bill of Rs 86,00 crore in the year 2017-18 to the tune of 2.5%-10%.
“The central government has taken tariff measures, by way of increase in the basic customs duty, to curb import of certain imported items,” stated the release by Finance Ministry. “These changes aim at narrowing the current account deficit (CAD),” it added.

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While the move is expected to blunt the mood and hype of the festive season sale and may attract fewer customers due to the hike in prices, the increased customs duty may lead to an increase in revenue of Rs 4,000 crore and help the government narrow the high CAD level apart from hoisting up the value of the rupee.

 

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