Delhi Government Slashes Aviation Fuel VAT to 7% for Six Months; Airlines to Save on Operating Costs

The Delhi government has lowered Value Added Tax on aviation turbine fuel from 25 percent to 7 percent for six months, aiming to reduce airline operating expenses and strengthen Delhi’s position as an aviation hub, even though officials estimate a revenue loss of around Rs 985 crore during this period.

Delhi Government Slashes Aviation Fuel VAT to 7% for Six Months; Airlines to Save on Operating Costs

Authorities expect cheaper aviation turbine fuel to ease costs for airlines using the national capital’s airports, which may support tourism, logistics and wider travel-linked businesses, including hotels and transport operators, while reinforcing Delhi’s role as a major centre for domestic and international air traffic

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The Chief Minister's Office announced the decision on Saturday, stating that Chief Minister Rekha Gupta wants to back the aviation sector, which still faces pressure from global disruptions and high operational expenses, and that the six-month VAT reduction is designed to keep travel and hospitality activities running more smoothly in the national capital.

Rekha Gupta also stated that the step is consistent with Prime Minister Narendra Modi's focus on improving connectivity, tourism and business activity, and authorities believe the lower VAT on aviation turbine fuel will cut operating costs for carriers and help related industries such as tourism and logistics.

VAT on aviation turbine fuel and nationwide policy context

Officials pointed out that most goods moved into the Goods and Services Tax system in 2017, yet states still control taxation on six fuel products, including aviation turbine fuel, leading to wide differences in VAT rates, currently ranging from 4 per cent to 30 per cent across India and forming a major expense for airlines.

Location	Previous VAT on ATF	New VAT on ATF	Duration / Note
Delhi	25%	7%	Initial six-month period; expected revenue loss Rs 985 crore
Maharashtra	18%	7%	Recent reduction announced

Alongside Delhi’s move, Maharashtra has also reduced VAT on jet fuel from 18 per cent to 7 per cent, and officials say such cuts, while easing airline costs, can strain state finances, as highlighted by Delhi’s projected Rs 985 crore revenue loss from this decision.

The Centre has introduced several measures earlier to support airlines, including capped aviation turbine fuel prices for domestic scheduled operators, lower airport charges and assistance through the Emergency Credit Linkage scheme, and policymakers now hope Delhi’s tax cut, reported in an article originally published on May 16, 2026, will further ease cost pressures on the sector.