The Delhi government on Saturday decided to reduce Value Added Tax (VAT) on aviation turbine fuel (ATF) from 25 per cent to 7 per cent, following a similar move by the Maharashtra government amid rising global jet fuel prices linked to the ongoing West Asia conflict.
Chief Minister Rekha Gupta announced the decision after a Delhi Cabinet meeting held under her leadership. The government said the tax cut would benefit passengers as well as airline companies operating from the national capital.
The decision comes days after the Maharashtra government reduced VAT on ATF from 18 per cent to 7 per cent to provide relief to airlines struggling with sharply increasing fuel costs.
Indian airlines are currently facing mounting pressure due to rising global jet fuel prices caused by the war in West Asia and disruptions in global energy supply chains. Fuel remains one of the largest expenses for airlines and accounts for nearly 35–40 per cent of their operating costs.
The Maharashtra and Delhi governments’ decision is expected to lower refuelling costs at Mumbai and Delhi airports. Airports in Pune and Nagpur are also expected to benefit from the move.
The Ministry of Civil Aviation had reportedly urged states such as Maharashtra, Delhi, Tamil Nadu and West Bengal to reduce VAT on jet fuel, as these states imposed some of the highest taxes on ATF in the country.
Airlines have long argued that India’s tax structure makes jet fuel unusually expensive because VAT is charged as a percentage of fuel prices instead of a fixed amount. This means taxes automatically increase when crude oil prices rise globally.
The aviation industry has repeatedly demanded that aviation turbine fuel be brought under the GST regime, which would allow airlines to claim input tax credit on fuel purchases and reduce operational costs.