Maharashtra announces 6-month reduction in VAT on aviation fuel; airfares likely to stabilise

MUMBAI: The Maharashtra government has reduced Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) to 7 per cent from 18 per cent for a period of six months with effect from May 15, in a move aimed at providing relief to airlines grappling with high fuel costs. The civil aviation ministry said the move by the Maharashtra state government will help stabilise the airfares that have gone up because of the West Asia crisis and the peak travel demand that comes up in summer.

Announcing the decision on X on Friday, Maharashtra chief minister Devendra Fadnavis said the state government had decided to provide temporary relief to the aviation sector by reducing VAT on ATF.


Civil aviation minister Kinjarapu Rammohan Naidu welcomed the move and said on X. “Due to the West Asia crisis, the Indian aviation industry is facing issues such as airspace closures, uncertain operations and a spike in ATF prices,” Naidu said on X.

“The reduction in VAT will help keep airfares in check while global challenges continue to push airfares upwards,” he added.


He added that the reduction in VAT on ATF would help lower operational costs for airlines and strengthen Maharashtra’s position as a key aviation hub.


The decision follows discussions between the Centre and states with high VAT rates on jet fuel, amid a sharp rise in ATF prices linked to geopolitical tensions and supply concerns.


ATF accounts for nearly 30-40 per cent of an airline’s operating costs, making taxation on jet fuel a key concern for carriers. Mumbai, one of the country’s busiest aviation hubs, is expected to be among the major beneficiaries of the tax cut.


Industry executives said the reduction is expected to lower operating costs for airlines and could help stabilise airfares during the six-month period. The aviation industry has long sought inclusion of ATF under the Goods and Services Tax (GST) regime to bring uniform taxation across states.