Maharashtra Reduces VAT On Aviation Turbine Fuel To 7% From 18%
Maharashtra cuts VAT on aviation fuel to 7 percent.
The Maharashtra government has reduced value-added tax (VAT) on aviation turbine fuel (ATF) from 18% to 7%, a move that is expected to ease operating costs for airlines amid rising airfares and sustained pressure on aviation fuel prices. The revised tax structure will come into effect from May 15, 2026, and will remain valid until November 14, 2026, according to a notification issued by the state finance department.
The decision is expected to significantly reduce fuel expenses for airlines operating in and out of Maharashtra, as ATF accounts for a substantial portion of airline operating costs, typically estimated at 35–40% of total expenditure. Industry stakeholders have long argued that high state-level taxes on aviation fuel contribute directly to elevated ticket prices.
The tax cut comes at a time when India’s aviation sector is facing multiple cost pressures, including elevated global fuel prices, operational disruptions, and longer flight routes caused by geopolitical tensions in West Asia. These factors have collectively contributed to upward pressure on domestic airfares in recent months.
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The move follows discussions between the Ministry of Civil Aviation and several state governments, including Maharashtra, Delhi, Tamil Nadu, and West Bengal, aimed at rationalising ATF taxation. These states have historically imposed some of the highest VAT rates on aviation fuel, with Tamil Nadu at 29%, Delhi at 25%, and Maharashtra previously at 18%.
Union Civil Aviation Minister Ram Mohan Naidu Kinjarapu welcomed the decision, stating that the aviation sector is currently navigating challenges arising from airspace restrictions, operational uncertainties, and rising fuel costs linked to global geopolitical tensions. He also acknowledged ongoing efforts by the Centre to engage with states to reduce VAT on ATF, particularly during periods of sustained cost pressure on the industry.
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