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What is the story about?
The Delhi government on Saturday (May 16) has approved a reduction in Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) in the national capital from 25% to 7%, with the concessional rate to remain in force initially for six months.
Chief Minister Rekha Gupta said the decision was taken in view of recent global geopolitical developments and rising financial pressure on the aviation sector. She added that the move may result in an estimated revenue loss of nearly ₹985 crore for the government.
According to the Chief Minister, the decision aims to maintain economic competitiveness, provide relief to the aviation sector, support tourism and logistics activities, and strengthen Delhi’s position as a major aviation and connectivity hub.
Also Read: Maharashtra cuts VAT on aviation fuel to 7% for six months amid fuel cost surge
The government said that although the Goods and Services Tax (GST) regime has been in place since 2017, states continue to have the authority to levy VAT on six petroleum products under the State List of the Constitution, including Aviation Turbine Fuel. As a result, ATF remains outside the GST framework.
The Chief Minister said airlines currently pay VAT and central excise duty on ATF while purchasing fuel from oil companies. She stated that ATF accounts for nearly 40% of airline operating costs, and higher tax rates directly impact ticket prices and the financial condition of airlines.
The government said VAT on ATF contributes an estimated annual revenue of around ₹1,368 crore, accounting for nearly 19% of Delhi’s total annual VAT collection. Rekha Gupta said Indira Gandhi International Airport handled nearly 8 crore passengers during 2024-25, making it the country’s largest aviation hub.
Also Read: Govt imposes export tax on petrol for first time as West Asia war keeps oil prices high
She added that the Delhi Government will continue efforts to support aviation, tourism, trade, logistics and investment, and said the VAT reduction decision aligns with the broader national vision articulated by Prime Minister Narendra Modi to avoid disruption in the aviation and tourism sectors.
Chief Minister Rekha Gupta said the decision was taken in view of recent global geopolitical developments and rising financial pressure on the aviation sector. She added that the move may result in an estimated revenue loss of nearly ₹985 crore for the government.
According to the Chief Minister, the decision aims to maintain economic competitiveness, provide relief to the aviation sector, support tourism and logistics activities, and strengthen Delhi’s position as a major aviation and connectivity hub.
Also Read: Maharashtra cuts VAT on aviation fuel to 7% for six months amid fuel cost surge
The government said that although the Goods and Services Tax (GST) regime has been in place since 2017, states continue to have the authority to levy VAT on six petroleum products under the State List of the Constitution, including Aviation Turbine Fuel. As a result, ATF remains outside the GST framework.
The Chief Minister said airlines currently pay VAT and central excise duty on ATF while purchasing fuel from oil companies. She stated that ATF accounts for nearly 40% of airline operating costs, and higher tax rates directly impact ticket prices and the financial condition of airlines.
The government said VAT on ATF contributes an estimated annual revenue of around ₹1,368 crore, accounting for nearly 19% of Delhi’s total annual VAT collection. Rekha Gupta said Indira Gandhi International Airport handled nearly 8 crore passengers during 2024-25, making it the country’s largest aviation hub.
Also Read: Govt imposes export tax on petrol for first time as West Asia war keeps oil prices high
She added that the Delhi Government will continue efforts to support aviation, tourism, trade, logistics and investment, and said the VAT reduction decision aligns with the broader national vision articulated by Prime Minister Narendra Modi to avoid disruption in the aviation and tourism sectors.
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