The government has levied 5 percent customs duty on aviation turbine fuel (ATF) with effect from September 27, which is not being passed on to the airlines, a statement released by the Indian Oil Corporation (IOC) said.

However, on the back of rising international crude prices and a depreciating rupee against the US dollar, oil companies have increased the domestic ATF prices by 7.25% effective October 1.

"For Mumbai, the increase of about Rs 2,650/KL (kilo litres) is on account of higher jet fuel prices in the international market and increase of about Rs 2,250/KL is on account of weakening of rupee during the last month and Rs 116/KL is on account of freight etc. The increase in domestic selling prices of ATF (Rs 5,016/KL at Mumbai) is therefore purely on account of the above factors," a statement issued by IOC said.

Aimed at narrowing current account deficit (CAD), the centre on September 26 has taken tariff measures by way of increase in the basic customs duty of 19 products including ATF, to curb import of certain imported items.