The Delhi government is likely to slash Value Added Tax (VAT) on Aviation Turbine Fuel (ATF). The move is expected to provide major relief to airlines crippled with rising operational costs amid a sharp surge in global fuel prices, sources told India Today.
As per the sources, the proposed reduction in VAT is expected to follow the model adopted by Maharashtra, which had earlier reduced VAT on ATF from 18 per cent to 7 per cent in a bid to boost aviation activity and lower airline operating expenses.
Delhi currently imposes a 25 per cent VAT on aviation fuel, among the highest rates in the country. Industry stakeholders have long argued that the high tax burden significantly increases airline costs, particularly at the national capital’s busy aviation hub.
Sources said the decision is aimed at easing pressure on the aviation sector at a time when global ATF prices have surged due to instability in West Asia and rising prices. Fuel expenses account for a major share of airline operational costs, and any increase in ATF prices directly impacts airline profitability and passenger fares.
Officials believe that reducing VAT on aviation fuel could help airlines manage escalating expenses and potentially prevent a steep rise in air ticket prices in the coming months.
The move comes as several airlines have raised concerns over mounting fuel costs and warned that sustained increases in crude oil prices could eventually be passed on to passengers through higher fares.
Aviation industry experts have repeatedly urged states to rationalise taxes on ATF, arguing that India’s aviation fuel taxes remain among the highest globally. Lower taxes, they say, could help improve connectivity, increase passenger traffic and support the long-term growth of the aviation sector.
The expected decision by the Delhi government is also being seen as an effort to remain competitive with other major aviation hubs. had reportedly led to operational advantages for airlines and increased fuel uplift activity at airports in the state.
While an official announcement is awaited, sources indicated that discussions on the proposal are at an advanced stage and a final decision could be taken soon.
The pressure on ATF prices has intensified in recent weeks due to the ongoing , which has and raised fears of supply instability in West Asia. Rising geopolitical tensions have pushed up international crude prices sharply, directly impacting aviation turbine fuel costs.