Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) has been raised from 25 per cent to 7 per cent, according to the Prime Minister’s Office, as quoted by ANI, claiming that it is a move to benefit airlines and passengers.“The Delhi government has decided to reduce VAT on Aviation Turbine Fuel (ATF) from the current 25 per cent to 7 per cent, a move that is likely to benefit airlines and common passengers,” the official statement said.This comes a day after Maharashtra reduced value-added tax (VAT) on aviation turbine fuel (ATF) to 7 per cent from 18 per cent for six months, effective May 15, to ease fuel costs for airlines amid rising global crude oil prices and West Asia-related unrest.ATF, which accounts for approximately 30 to 40 percent of airline operating costs, has come under sustained price pressure due to geopolitical tensions, supply chain disruptions, and volatility in global crude oil markets, particularly amid Middle East conflicts and periodic airspace restrictions. Rising fuel costs have had a significant impact on airline balance sheets, forcing carriers to adjust prices, especially on high-demand domestic routes.
The latest policy move is said to provide some cost relief to airlines, improve operational viability, and help ease ticket prices during peak summer travel demand. It is also likely to support route expansion and capacity planning by reducing variable input costs, thereby enhancing overall aviation connectivity and consolidating India’s major airport hubs, including Mumbai and Delhi, in a highly competitive aviation environment.
Which state do you think made a better decision regarding the ATF VAT reduction?
