The Delhi government on Saturday announced a sharp reduction in Value Added Tax (VAT) on Aviation Turbine Fuel (ATF), cutting the rate from 25 per cent to 7 per cent for an initial period of six months, according to the Chief Minister’s Office (CMO).
Chief Minister Rekha Gupta said the move is aimed at supporting the aviation sector, which continues to face pressure from global disruptions and elevated operating costs.
The tax cut, however, is expected to result in a revenue loss of around Rs 985 crore for the Delhi government.
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Gupta said the decision aligns with Prime Minister Narendra Modi’s vision of strengthening connectivity, tourism and business activity. The government expects the lower VAT regime to reduce operational costs for airlines, support tourism and logistics businesses, and reinforce Delhi’s position as a major aviation hub.
She noted that while most goods were brought under the Goods and Services Tax (GST) framework in 2017, states continue to retain taxation powers over six fuel products, including aviation turbine fuel.
The Chief Minister said the government remains committed to supporting tourism, trade and transport sectors in the national capital and added that the six-month tax relief has been introduced to ensure smoother functioning of the travel and hospitality industries.
The Centre had earlier introduced several measures to ease pressure on airlines, including capping ATF prices for domestic scheduled operators, reducing airport charges and extending support through the Emergency Credit Linkage scheme.
VAT on ATF continues to vary significantly across states, ranging between 4 per cent and 30 per cent, making it a major cost component for airlines.
