After Maharashtra, Delhi Govt Reduces VAT On ATF To 7% From 25% As Airfares Surge

The Delhi government on Saturday announced a sharp reduction in Value Added Tax (VAT) on Aviation Turbine Fuel, slashing it from 25% to 7%, said sources in the Delhi Chief Minister's Office (CMO).

The move makes Delhi the latest state to fall in line with the Centre's push to ease the financial burden on airlines at a time when airfares have surged to uncomfortable highs for ordinary passengers.

The development comes a day after Maharashtra led the way, reducing its VAT on ATF from 18% to 7%, effective Friday and applicable until November 14, 2026, in a move intended to provide temporary relief to airlines and help stabilise surging airfares during the peak summer travel season.

Fuel remains one of the largest expenses for Indian airlines, accounting for 35-40% of total expenditure. The reduction in VAT comes at a time when carriers are facing pressure from higher aviation fuel prices, airspace restrictions and longer flying routes due to tensions in middle east.

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According to media reports last month, the ministry held separate meetings with Delhi, Tamil Nadu, West Bengal and Maharashtra seeking relief on ATF taxes amid supply-chain disruptions linked to the conflict in West Asia.

The four states levy some of the highest VAT rates on ATF in the country. Tamil Nadu charges 29%, while Delhi levied 25%. Maharashtra had imposed 18% VAT. 

Union Civil Aviation Minister Ram Mohan Naidu Kinjarapu said the aviation industry was facing challenges due to "air space closures, uncertain operations, spike in ATF prices" linked to the middle-east crisis.

"One of the important expenditures in aviation industry is the VAT on ATF that is levied by state governments," the minister said in a post on X. He added that the ministry had been engaging with states to lower VAT, particularly during the ongoing crisis.

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