The Delhi government announced a significant reduction in Value Added Tax (VAT) on Aviation Turbine Fuel on Saturday, slashing it from 25% to 7%, according to sources in the Delhi Chief Minister's Office (CMO). As reported by The Statesman, the decision was taken at a Cabinet meeting chaired by Chief Minister Rekha Gupta, with the official statement stating that "Delhi government has decided to reduce the value-added tax (VAT) on aviation turbine fuel (ATF) from the existing 25 per cent to 7 per cent, a move which is likely to benefit the airlines and common passengers." This move makes Delhi the latest state to align with the Centre's initiative to ease financial burden on airlines amid rising airfares. The reduction comes as airlines face mounting pressure from higher aviation fuel prices, airspace restrictions, and longer flying routes due to tensions in the Middle East.
The Delhi announcement follows Maharashtra's lead, which reduced its VAT on ATF from 18% to 7% effective Friday and applicable until November 14, 2026. As reported by sources, this move was intended to provide temporary relief to airlines and help stabilise surging airfares during the peak summer travel season. The development represents a coordinated effort by multiple states to address industry challenges during the ongoing crisis.
Fuel remains one of the largest expenses for Indian airlines, accounting for 35-40% of total expenditure, according to media reports. The reduction in VAT comes at a critical time when carriers are facing pressure from higher aviation fuel prices, airspace restrictions, and longer flying routes due to tensions in the Middle East. The move follows global fuel uncertainty arising from the ongoing conflict in West Asia, as reported by PTI, with the government acknowledging that "one of the important expenditures in the aviation industry is the VAT on ATF that is levied by state governments."
According to media reports, the four states of Delhi, Tamil Nadu, West Bengal, and Maharashtra levy some of the highest VAT rates on ATF in the country. Tamil Nadu charges 29%, while Delhi previously levied 25% and Maharashtra had imposed 18% VAT. The ministry held separate meetings with these states seeking relief on ATF taxes amid supply-chain disruptions linked to the conflict in West Asia.
Union Civil Aviation Minister Ram Mohan Naidu Kinjarapu acknowledged that the aviation industry was facing challenges due to "air space closures, uncertain operations, spike in ATF prices" linked to the Middle East crisis. As reported by the minister, the ministry has been actively engaging with states to lower VAT rates, particularly during the ongoing crisis affecting the aviation sector. The latest Delhi decision demonstrates continued government support for the industry amid global fuel uncertainty.
