The Maharashtra government has reduced value-added tax on aviation turbine fuel to 7% from 18%, according to a notification issued by the state finance department.
The revised tax rate will come into effect from May 15, 2026, and remain in force until Nov. 14, 2026, according to the notification, dated May 14, that was issued by the state finance department. The move lowers VAT on ATF by 11 percentage points and could reduce fuel costs for airlines operating in the state, according to the notification reviewed by NDTV Profit.
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.
The move followed discussions between the Ministry of Civil Aviation and several state governments on lowering VAT on jet fuel. 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 levies 25%. Maharashtra had imposed 18% VAT before the latest cut.
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.
"I am thankful to State Govt of Maharashtra and Devendra Fadnavis ji, for rising to the occasion and notifying the reduction in VAT for ATF from 18% to 7% with effect from today," he said.
The minister said Maharashtra has 16 operational airports and annual passenger traffic of around 75 million passengers. He said the VAT reduction would support airline operations and help keep airfares under check while global pressures continue to push costs higher.
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