Maharashtra government slashes VAT on aviation fuel from 18% to 7% to ease airfare pressure

In a major relief for India’s aviation sector, grappling with soaring fuel costs and global instability, the Maharashtra government has sharply reduced Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) from 18 per cent to 7 per cent amid the escalating West Asia crisis.

The tax cut, which came into effect on Friday, is expected to ease operational pressure on airlines and help prevent a sharp rise in domestic airfares as geopolitical tensions continue to disrupt global energy markets and aviation routes.

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Announcing the decision, Union Civil Aviation Minister Kinjarapu Ram Mohan Naidu called the move a crucial intervention at a time when airlines are facing mounting cost pressures linked to volatile crude oil prices and regional instability.

Naidu thanked Maharashtra Chief Minister Devendra Fadnavis for the “timely intervention,” saying the reduction would directly support flight operations and benefit millions of passengers.

“Maharashtra has 16 operational airports and handles nearly 75 million passengers annually. This VAT reduction will help flight operations across these airports and provide relief to a large number of travellers,” the minister said.

The state remains India’s busiest aviation hub, with nearly two lakh passengers travelling daily through airports across Maharashtra.

Due to the West Asia crisis, the Indian aviation industry is facing certain issues like air space closures, uncertain operations, spike in ATF prices. During these times, under the leadership of Hon’ble PM Shri @narendramodi ji, the government of India has given multiple respites… pic.twitter.com/Ayd671wWbq

— Ram Mohan Naidu Kinjarapu (@RamMNK) May 15, 2026

West Asia crisis surges air travel costs

India’s aviation industry has come under severe strain following the escalation of tensions in West Asia, which has triggered airspace disruptions, route diversions and a spike in ATF prices.

ATF accounts for nearly 30 to 40 per cent of an airline’s operating expenses, making fuel one of the biggest financial burdens for carriers. Rising crude oil prices linked to geopolitical uncertainty have increased pressure on airline profitability and ticket pricing.

The Centre has already introduced measures, including capped ATF prices for domestic carriers, lower airport charges and financial support schemes to stabilise the sector.