NEW DELHI — In a significant move to support the aviation sector, authorities in Delhi and Maharashtra have announced reductions in value-added tax levied on aviation turbine fuel, bringing rates down to seven percent in both jurisdictions.
The decision comes at a critical juncture for Indian carriers, which have been contending with persistently high international crude oil prices that have inflated operational expenses. Aviation turbine fuel typically accounts for nearly 40 percent of an airline's total operating costs, making tax relief on this front particularly meaningful for the financially strained industry.
The tax reduction is expected to lower ticket prices for passengers travelling to and from major airports in Delhi and Mumbai, India's two busiest aviation hubs that together handle millions of domestic and international passengers annually. Industry analysts suggest the move could also improve airlines' profit margins, potentially encouraging expansion of routes and frequencies.
Several other Indian states continue to levy significantly higher VAT rates on aviation fuel, ranging from 20 to 30 percent, which has long been a point of contention for carriers seeking a more competitive operational environment. The aviation sector has repeatedly urged state governments to rationalise fuel taxation to align with global standards and support India's growing air travel market.