Delhi govt cuts VAT on jet fuel to 7% for six months to aid airlines

The Delhi government has decided to reduce the Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) from 25 per cent to 7 per cent for six months to support the struggling airline industry, despite an expected revenue loss of Rs 985 crore.

The Delhi government on Saturday decided to reduce the Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) from 25 per cent to 7 per cent, according to the Chief Minister's Office (CMO). Chief Minister Rekha Gupta informed that this lower tax rate will last for six months for now.

Aiding the Airline Industry

As per the release, this decision was made to help the struggling airline industry, which is facing tough times due to global issues. Even though this move helps the industry, it means the Delhi government will lose about Rs 985 crore in tax revenue.

The Chief Minister explained that this step matches the Prime Minister's goal to improve travel and boost business. The main aims are to lower costs for airlines, boost tourism, help shipping businesses, and keep Delhi as a top travel hub.

Fuel Taxation Context

She also mentioned that while most goods fell under the nationwide GST system in 2017, state governments still have the special right to tax six fuel products, which is why aeroplane fuel is taxed separately.

The Chief Minister said the government is fully committed to helping tourism, trade, and transport grow in the capital. She repeated that this tax cut will last for six months to follow Prime Minister Narendra Modi's vision of keeping the travel and tourism industries running smoothly.

Centre's Support and State VAT Variations

Earlier, the Centre introduced several measures to cushion the impact. Under the leadership of Prime Minister Modi, the government has capped ATF prices for domestic scheduled operators, reduced airport charges, and extended support through the Emergency Credit Linkage scheme, Naidu said.

However, VAT on ATF, which is levied by state governments, remains a significant cost component and varies widely across states, often ranging from 4 per cent to 30 per cent.

The move is also expected to improve the competitiveness of Maharashtra's airports compared to those in neighbouring states with lower VAT rates. (ANI)

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