The Delhi government has announced a significant reduction in Value Added Tax (VAT) on Aviation Turbine Fuel (ATF), decreasing the levy from 25% to 7%. This move aims to ease operational costs for airlines and provide relief to air passengers. The decision is expected to lower fuel expenses for carriers operating from the national capital, enhancing the overall viability of airline operations.
The reduction in VAT on ATF by the Delhi government follows a similar move by the Maharashtra government, which also lowered VAT to 7% from 18% for a six-month period starting May 15. Both states’ decisions are intended to help airlines cope with rising fuel costs amidst global crude oil price increases and disruptions in West Asia. ATF accounts for a significant portion of airlines’ operating expenses, making it a crucial cost component for the aviation industry.
With fuel prices on the rise, airlines have been under pressure due to geopolitical uncertainties, supply chain disruptions, and fluctuations in global crude markets. This reduction in VAT is expected to provide immediate cost relief to airlines, potentially stabilizing airfares in the upcoming months. Moreover, it may support airlines’ route expansion plans, enhance operational efficiency, and encourage higher capacity deployment by reducing variable input costs.
