Maharashtra Cuts VAT on Aviation Fuel to 7 pc from 18 pc to Ease Pressure on Airlines

NEW DELHI:
The Maharashtra Government on Friday reduced value-added tax (VAT) on aviation turbine fuel (ATF) to 7 per cent from 18 per cent, offering relief to airlines grappling with rising operational costs amid global uncertainties and higher fuel prices.

According to a notification issued by the state finance department, the revised VAT rate came into effect from May 15 and will remain applicable until November 14, 2026.

The move marks an 11-percentage-point reduction in VAT on jet fuel and is expected to lower fuel expenses for airlines operating in the state.

Fuel is one of the biggest cost components for Indian airlines, accounting for nearly 35-40 per cent of their total expenditure.

The tax cut comes at a time when carriers are facing pressure from elevated aviation fuel prices, longer flying routes and airspace restrictions linked to geopolitical tensions in the Middle East.

The decision follows discussions between the Ministry of Civil Aviation and several state governments regarding reductions in VAT on aviation fuel.

Media reports last month had indicated that the ministry held separate meetings with Delhi, Tamil Nadu, West Bengal and Maharashtra to seek relief on ATF taxes amid supply-chain disruptions caused by the West Asia conflict.

Among Indian states, Tamil Nadu currently levies one of the highest VAT rates on ATF at 29 per cent, while Delhi imposes 25 per cent.

Maharashtra had earlier levied 18 per cent VAT before the latest reduction.

Ram Mohan Naidu Kinjarapu said the aviation sector has been facing challenges due to “air space closures, uncertain operations, spike in ATF prices” linked to the Middle East crisis.

“One of the important expenditures in aviation industry is the VAT on ATF that is levied by state governments,” the minister said in a post on X.

He added that the ministry had been engaging with states to lower VAT rates, particularly during the ongoing crisis.

The minister also thanked the Maharashtra government and Devendra Fadnavis for reducing VAT on ATF from 18 per cent to 7 per cent with immediate effect.