Delhi Govt cuts VAT on aviation fuel from 25% to 7% for 6 months

The Delhi government, led by Chief Minister Rekha Gupta, has reduced the Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) from 25 per cent to 7 per cent.

The Delhi Cabinet, chaired by CM Gupta, approved the decision, which is being seen as a move to ease the burden on air carriers amid the prevailing geopolitical situation and instability in the international fuel market.

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According to Chief Minister Rekha Gupta, the concessional VAT rate will remain applicable for an initial period of six months.

CM Gupta said that the decision, taken in the interest of both the country and Delhi, may result in a revenue loss of approximately Rs 985 crore for the government.

She added that the move was taken following Prime Minister Narendra Modi’s call to support the aviation sector, promote tourism and logistics activities, and strengthen the national capital as the country’s leading aviation and connectivity hub.

Sharing details of the Cabinet decision, CM Gupta stated that although the Goods and Services Tax (GST) regime has been in force since 2017, states still retain the authority to levy VAT on six petroleum products, including Aviation Turbine Fuel, as they fall under the State List in the Seventh Schedule of the Constitution. Consequently, ATF remains outside the purview of GST.

The Chief Minister said that VAT on ATF directly impacts air ticket prices and the aviation sector, and that challenges facing the industry have intensified under the current global scenario.

She further stated that VAT on ATF is estimated to generate annual revenue of around Rs 1,368 crore, accounting for nearly 19 per cent of the Delhi government’s total annual VAT collection.

As a result, VAT on ATF continues to remain a significant source of revenue for the Delhi government.

The Chief Minister also pointed out that Delhi Airport remains the country’s largest aviation hub. During 2024–25, nearly 8 crore passengers were recorded at the Indira Gandhi International Airport, the highest in the country.

Earlier, the government of Maharashtra had also announced a reduction in VAT on ATF, cutting the levy from 18 per cent to 7 per cent for a period of six months.