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Delhi May Slash Aviation Fuel Tax
16 May
Summary
- Delhi government likely to cut VAT on aviation fuel.
- Current VAT on aviation fuel in Delhi is 25%.
- Cut aims to reduce airline expenses and passenger fares.
The Delhi government is reportedly close to reducing the Value Added Tax (VAT) on Aviation Turbine Fuel (ATF). This potential policy change is expected to offer substantial relief to airlines facing mounting operational expenses exacerbated by rising global fuel prices. Sources indicate the move might mirror Maharashtra's strategy, which previously lowered its ATF VAT from 18% to 7% to stimulate aviation activity.
Delhi currently levies a 25% VAT on aviation fuel, placing a significant financial burden on carriers operating from the capital's hub. The proposed reduction is seen as a crucial step to mitigate the impact of heightened crude oil prices and instability in West Asia. By easing the tax on ATF, officials hope to help airlines manage costs, thereby potentially averting a steep rise in airfares in the near future.
Industry experts have consistently advocated for tax rationalization on ATF in India, highlighting that such taxes are among the highest globally. Lowering taxes is believed to foster better connectivity, boost passenger numbers, and support the overall growth of the aviation sector. This potential decision by Delhi also aims to enhance its competitiveness against other major aviation centers, similar to the reported benefits Maharashtra saw after its VAT reduction.
