The Maharashtra government on Friday, May 15, has reduced Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) from 18% to 7% in a move aimed at providing relief to airlines amid rising operational costs and growing pressure on the aviation sector.
According to a government notification issued on May 14, the revised tax rate came into effect from May 15, 2026, and will remain applicable till November 14, 2026. The decision comes shortly after state-owned fuel companies increased jet fuel prices for international flights earlier this month for the second consecutive month. The reduction in VAT is expected to significantly lower fuel expenses for airlines operating from Maharashtra.
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Fuel accounts for nearly 35% to 40% of the total operating costs of Indian airlines. The aviation sector has also been facing additional pressure due to tensions in West Asia and Central Asia, which have led to changes in several flight routes and airspace restrictions in some regions.
The Maharashtra government’s decision is expected to provide financial relief to airlines at a time when Aviation Turbine Fuel prices have been rising steadily. Reports said the Ministry of Civil Aviation had held discussions with the governments of Maharashtra, Delhi, Tamil Nadu and West Bengal, where VAT rates on ATF were among the highest in the country, urging them to consider tax reductions.
Before the revision, Tamil Nadu had a VAT rate of 29 per cent on ATF, Delhi 25 per cent, and Maharashtra 18 per cent.