Delhi government reduces VAT on turbine fuel (Img: Internet)
New Delhi: The Delhi government on Saturday announced a major reduction in Value Added Tax (VAT) on Aviation Turbine Fuel (ATF), lowering the rate from 25 percent to 7 percent.
According to an official statement issued by the Chief Minister’s Office, the decision is aimed at providing relief to airlines facing rising fuel expenses and is also expected to benefit air passengers through more stable ticket pricing.
The move comes at a time when airlines are dealing with elevated operating costs due to global crude oil volatility and disruptions linked to tensions in West Asia.
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ATF is one of the largest operational expenses for airlines, accounting for nearly 30 to 40 percent of total operating costs.
The aviation sector has been under sustained pressure in recent months because of fluctuating global oil prices, supply chain disruptions and geopolitical tensions affecting fuel availability and transportation routes.
Industry experts believe the reduction in VAT could help airlines manage costs more effectively, especially during the peak summer travel season when passenger demand remains high.
Lower fuel taxes are also expected to improve operational margins for domestic carriers and support route expansion plans.
The Delhi government’s decision comes just a day after Maharashtra announced a temporary reduction in VAT on ATF from 18 percent to 7 percent for six months, effective May 15.
States have increasingly come under pressure from the aviation industry to rationalise taxes on aviation fuel, as India continues to maintain some of the highest ATF tax rates in the region.
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Airlines have repeatedly argued that high fuel taxation directly impacts ticket prices and affects sector growth.
Officials said the tax cut could help strengthen major aviation hubs such as Delhi by improving the overall business environment for airlines.
The reduction in operational costs may also encourage carriers to add capacity on domestic routes and improve connectivity across the country.
The policy is expected to support the aviation sector at a time when airlines are balancing increasing passenger traffic with rising input costs and international market uncertainties.
