Aviation Turbine Fuel (ATF) falls outside the purview of Goods and Service Taxes (GST), and is traded on Ad valorem rates, which means that the impact of an increase in price of the fuel because of global rate hike translates into an even higher price for airlines as the tax incidence also rises. So, to insulate the price of ATF from cascading effect, the Indian government is considering levying specific rates of excise duty on ATF. Currently, the charge is 11% under the Ad valorem scheme. ATF makes up for almost half of the cost of an airline and rates vary from state to state depending on imposition of local Value Added Tax (VAT). Specific excise duty would address part of the concerns of oil companies and airlines of not being able to set of tax paid on inputs against the tax on final product as ATF has been kept out of GST regime. Thus, to protect the interest of Aviation industry, Finance Minister Nirmala Sitharaman, on the forthcoming budget for the 2020-2021 fiscal year, may bring specific excise duty expressed in INR per kiloliter. Consider if the cost  of production of ATF is Rs 100 per kiloliter, the fuel at exit from the refinery will be priced at Rs 111 per kiloliter after levying 11 per cent excise duty. If the cost rises to Rs 110, the ex-refinery rate would attract an excise duty of Rs 12. A specific duty of Rs 11 per kiloliter would mean that even if the cost goes up the tax incidence would remain the same. Finance Minister, further, said that it would ensure correct payment of duty at the initial clearance stage itself and will eliminate complexities and difficulties in redetermination of duty on further stock transfers which sometime result in avoidable litigation. Oil Ministry, too, has favored ATF under the GST dominion to help companies set off their tax that they paid on input.