In a major relief for the aviation sector, the Delhi Government has announced a reduction in Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) from 25 per cent to 7 per cent. The decision, approved by the Cabinet led by Chief Minister Rekha Gupta, will remain in effect for an initial period of six months.
The Chief Minister said the step was taken in view of rising financial pressures on airlines amid global geopolitical developments and intensifying competition in the aviation industry.
The government believes the VAT cut will help lower operational costs for airlines and reinforce Delhi’s position as one of the country’s leading aviation and connectivity hubs. “Airlines to get major relief, concessional rate to remain in force for six months initially,” CM Rekha Gupta stated.
The Delhi Government estimates the decision could result in a revenue loss of nearly Rs 985 crore. Despite this, officials said the measure is aimed at promoting tourism, trade, logistics, and overall economic activity in the capital.
Explaining the rationale, Rekha said ATF remains outside the GST framework, allowing states to levy VAT. She highlighted that ATF accounts for nearly 40 per cent of airline operational costs, making fuel taxation a critical factor influencing airfares and the financial health of carriers.
The government also underlined Delhi’s importance as a key aviation centre. According to official figures, Indira Gandhi International Airport handled nearly 8 crore passengers during 2024–25, the highest in the country.
The move aligns with PM Narendra Modi’s vision of strengthening connectivity, supporting economic growth and ensuring the aviation and tourism sectors continue to operate smoothly during challenging global conditions.
