India's government aims to include aviation turbine fuel (ATF) in the list of products within the proposed goods and services tax (GST).
Its inclusion will ensure a uniform tax on the aviation fuel across all states, which at present is particularly high, reaching the 30% mark.
The country's jet fuel is nearly 60% higher than others and represents 40-50% of an airline's operating costs.
'We want jet fuel to be part of the GST. This will reduce taxes on the fuel by a huge margin and at one stroke, make aviation profitable in this country,' said aviation ministry officials.
If implemented, the GST programme will replace multiple state and central levies with a single tax regime.
Between March 2013 and March 2014, India's top five domestic airlines reported combined losses of Rs 9,737 crore, up 85% from the previous year.
Robin Pathak, aviation analyst and former Indian Airlines director, says: 'Most of the losses were because of a spike in jet fuel prices and a huge fall in the value of the rupee. The two factors drove down profitability for the entire industry.'
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