Delhi Slashes VAT on Aviation Fuel to 7%

The Delhi government has reduced the VAT on aviation turbine fuel from 25% to 7%, benefiting airlines and passengers but potentially losing Rs 985 crore in revenue. The move, linked to global fuel price uncertainty, aims to lower operational costs and improve the aviation sector's financial health.

In a significant policy shift, the Delhi government has slashed the value-added tax (VAT) on aviation turbine fuel from a steep 25% to just 7%. The announcement was made by Chief Minister Rekha Gupta on Saturday, who noted that this initiative is aimed at alleviating the financial burden on airlines and, by extension, passengers.

The decision comes at a cost; it is expected to result in a potential revenue loss of around Rs 985 crore for the Delhi government. However, Gupta emphasized the necessity of the move given the global fuel price volatility, exacerbated by ongoing geopolitical tensions in West Asia.

The VAT on aviation turbine fuel remains a significant revenue stream, annually generating approximately Rs 1,368 crore. Despite the overarching GST framework in India, states retain the authority to levy VAT on certain petroleum products, including ATF, a critical factor bolstering this decision.