The Delhi government has reduced the Value Added Tax on Aviation Turbine Fuel (ATF) from 25% to 7% for an initial period of six months, days after Maharashtra announced a similar reduction in the tax on jet fuel.
The decision was taken at a Cabinet meeting chaired by Chief Minister Rekha Gupta on Saturday, 16 May 2026.
The cut is aimed at easing fuel cost pressure on airlines operating in and out of the national capital at a time when global fuel markets remain under stress.
Aviation Turbine Fuel, or ATF, is one of the largest cost components for airlines.
A reduction in VAT lowers the tax burden on fuel purchased by airlines in the state, which can help reduce operating costs and support air connectivity.
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Delhi’s decision follows Maharashtra’s move to reduce VAT on ATF from 18% to 7% for six months, with effect from 15 May 2026.
Maharashtra’s reduction was announced against the backdrop of high fuel costs, West Asia-related disruptions and peak summer travel demand.
The Delhi government’s move may lead to an estimated revenue impact of around ₹985 crore.
Union Civil Aviation Minister Kinjarapu Ram Mohan Naidu welcomed the reductions in separate posts on X.
He thanked the Maharashtra government and Chief Minister Devendra Fadnavis after the state reduced VAT on ATF from 18% to 7%, and later appreciated the Delhi government and Chief Minister Rekha Gupta for reducing the levy from 25% to 7%.
The tax cut is expected to benefit airlines using Delhi as a major domestic and international aviation hub.
Lower ATF taxation may help airlines manage costs, particularly on routes where fuel uplift from Delhi is significant.
However, the direct impact on passenger fares will depend on several factors, including crude oil prices, airline pricing decisions, demand, route competition and overall operating costs.
The move comes as state-level ATF taxation continues to be a key concern for India’s aviation sector.
Airlines have repeatedly sought lower taxes on jet fuel, arguing that high ATF costs affect route viability and fare stability.
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