Delhi govt eases aviation fuel VAT from 25 per cent to 7 per cent

The Delhi government has slashed Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) from 25 per cent to 7 per cent. This comes just a day after the Maharashtra government reduced VAT on ATF to 7 per cent from 18 per cent for six months starting May 15. 

In a move aimed at easing operational costs for airlines, the Delhi government on Saturday announced a reduction in Value Added Tax (VAT) on Aviation Turbine Fuel (ATF), bringing the levy down from 25 per cent to 7 per cent. 

IANS reported that, according to the Chief Minister’s Office, the decision is expected to lower fuel expenses for carriers operating from Delhi and to help improve the overall viability of airline operations.

“Delhi government has decided to reduce the value-added tax (VAT) on aviation turbine fuel (ATF) from the existing 25 per cent to 7 per cent, a move which is likely to benefit the airlines and common passengers,” the official statement read.

Maharashtra government reduces VAT

This comes just a day after the Maharashtra government reduced VAT on ATF to 7 per cent from 18 per cent for six months starting May 15. 

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Crude oil prices 

The move by both states is aimed at cushioning airlines from fuel costs amid elevated global crude oil prices and disruptions linked to tensions in West Asia.

ATF constitutes nearly 30 to 40 per cent of an airline’s operating expenses, making it one of the most critical cost components for the aviation industry. 

The airlines have been facing sustained pressure due to geopolitical uncertainties, fluctuations in global crude markets, and periodic airspace restrictions triggered by the tensions in West Asia. 

The surge in fuel prices has significantly strained airline balance sheets in recent months, prompting carriers to recalibrate ticket pricing.

West Asia tensions 

On February 28, the United States and Israel launched joint attacks on Tehran and other Iranian cities, killing Iran's then Supreme Leader Ali Khamenei, senior commanders, and civilians. 

Following this, Iran responded with waves of missile and drone strikes targeting Israel and US interests in the region. Tehran also tightened its grip on the Strait of Hormuz, a vital global shipping chokepoint that handles a massive portion of the world's energy supply.

Notably, although a ceasefire was achieved between the parties on April 8, tensions in the strategic waterway continue.

(with IANS inputs)

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