Delhi cuts VAT on aviation turbine fuel to 7%

Delhi government cuts VAT on Aviation Turbine Fuel from 25% to 7% for six months to boost aviation sector amid global pressures, risking ₹985 crore in revenue.

New Delhi: The Delhi government on Friday reduced the Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) from 25% to 7% for a period of six months, citing rising financial pressure on the aviation sector amid recent global geopolitical developments.

Chief minister Rekha Gupta said the move was aimed at maintaining Delhi’s economic competitiveness and supporting aviation, tourism and logistics activities in the Capital. (Hindustan Times)

Announcing the Cabinet decision, chief minister Rekha Gupta said the move was aimed at maintaining Delhi’s economic competitiveness and supporting aviation, tourism and logistics activities in the Capital.

“The concessional VAT rate on ATF will initially remain in force for six months. The decision has been taken in the interest of both the nation and Delhi,” Gupta said, adding that the measure could result in an estimated revenue loss of nearly ₹985 crore to the Delhi government.

According to officials, ATF accounts for nearly 40% of airlines’ operational costs, with airlines currently paying both VAT and central excise duty on fuel purchases from oil companies. The government said high tax rates have a direct impact on ticket prices and the financial health of airlines.

Gupta said VAT on ATF contributes nearly ₹1,368 crore annually, accounting for around 19% of Delhi’s total annual VAT collection. She added that the decision aligns with Prime Minister Narendra Modi’s focus on strengthening connectivity and economic activity.

The government said the measure was also intended to support operations at Indira Gandhi International Airport.