Delhi Cabinet Approves Sharp Reduction in Aviation Fuel VAT
The Delhi government has announced a major reduction in Value Added Tax (VAT) on Aviation Turbine Fuel (ATF), bringing it down from 25 percent to 7 percent. The decision was approved during a Cabinet meeting chaired by Chief Minister Rekha Gupta and is expected to provide relief to airlines operating from the national capital.
According to the Delhi government, the reduced VAT rate will initially remain effective for six months. Officials said the move has been taken to support the aviation sector, which has been facing rising operational costs due to global fuel price fluctuations and geopolitical tensions in West Asia.
Aviation Turbine Fuel is one of the biggest expenses for airlines and accounts for nearly 30 to 40 percent of their operating costs. Industry experts believe that lowering taxes on ATF can help airlines reduce financial pressure and may eventually lead to more stable or affordable airfares for passengers travelling from Delhi.
Speaking about the decision, Chief Minister Rekha Gupta said the tax cut aligns with Prime Minister Narendra Modi’s vision of improving connectivity and boosting economic growth. The government expects the move to strengthen tourism, trade, logistics, and investment opportunities in the capital city.
Delhi was previously among the states with the highest VAT rates on aviation fuel. The latest reduction is expected to make the city more competitive as a major aviation hub. Officials also highlighted that nearly eight crore passengers travelled through Indira Gandhi International Airport during the 2024-25 financial year, making it India’s busiest airport.
The move follows similar efforts by other states to reduce the tax burden on aviation fuel as airlines continue to deal with increasing operational expenses. Industry observers believe the decision could encourage airlines to expand services and improve connectivity from Delhi in the coming months.
