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Air Cargo

Big Relief For Airlines As Delhi Plans To Reduce VAT On Aviation Turbine Fuel

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May 16, 2026 0 Comments
Delhi levies 25% VAT on ATF, among the highest rates in the country.
Delhi levies 25% VAT on ATF, among the highest rates in the country.

In a major move to provide relief to the airlines, the BJP-led Delhi Government plans to reduce Value Added Tax (VAT) on Aviation Turbine Fuel (ATF). The announcement is aimed at providing relief to airlines grappling with the rising operational costs amid a hike in global fuel prices. It is learnt that the proposed cut in VAT is expected to replicate the model adopted by Maharashtra, which had earlier slashed VAT on ATF from 18%  to 7% in a bid to boost the aviation activity and reduce the overall airline operating expenses.

As of today, Delhi levies 25% VAT on ATF, among the highest rates in the country, and industry stakeholders have long maintained that this is a significant factor in increasing the cost of airlines, particularly at the congested aviation hub of the national capital. Reliable sources seem to suggest that the move is intended to ease pressure on the aviation sector when ATF prices have increased globally due to instability in West Asia and rising crude oil prices. A major component of airline operational costs is fuel, and any rise in ATF prices impacts airline profitability and passenger fares. Officials also hope that lowering the VAT on aviation fuel will enable airlines to deal with rising costs and avoid hiking air ticket prices in the next few months. Airlines have expressed concern over rising fuel costs and cautioned that sustained rises in crude oil prices would eventually be passed on to passengers via higher fares.

The aviation industry has long urged states to rationalize taxes on ATF, saying that India's aviation fuel taxes remain among the highest in the world and could benefit from lower taxes to improve connectivity, drive passenger traffic, and support the long-term growth of the sector. The decision is also being viewed as an attempt by the Delhi government to keep up with other major aviation hubs. Earlier this year, when the VAT in Maharashtra was reduced, it had reportedly resulted in operational benefits for airlines and an increase in fuel uplift at the airports in the state. While it is still awaiting an official announcement, sources said that discussions on the proposal are at an advanced stage and a final decision could be taken soon. In recent weeks, the ongoing Iran-Israel conflict has added to the pressure on ATF prices by disrupting global crude oil markets and stoking fears about supply instability in West Asia. 

 

For more such news and updates, visit CARGOCONNECT.

 

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