Major Decision by Delhi’s Rekha Gupta Government, VAT on Aviation Fuel Reduced from 25 Percent to 7 Percent

Airlines to Get Major Relief, Concessional Rate to Remain in Force for Six Months Initially: CM Rekha Gupta

CM Says: Major Economic Decision by Delhi Government Amid Global Crisis and Rising Competition

New Delhi, May 2026 : In view of recent global geopolitical developments and rising financial pressure on the aviation sector, the Delhi Government’s Cabinet has taken a significant decision to reduce the Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) in the National Capital Territory from 25 percent to 7 percent. According to Chief Minister Mrs. Rekha Gupta, the concessional rate will initially remain in force for a period of six months. The decision, taken in the interest of both the nation and Delhi, may result in an estimated revenue loss of nearly Rs 985 crore for the Government.

According to Chief Minister Mrs. Rekha Gupta, the decision has been taken in line with the Prime Minister’s emphasis on strengthening connectivity and economic activity, as well as with the objective of maintaining economic competitiveness, providing relief to the aviation sector, promoting tourism and logistics activities, and strengthening the national capital’s position as one of the country’s leading aviation and connectivity hubs. Sharing details of the Cabinet decision, the Chief Minister said that although the GST regime has been in force across the country since 2017, States still retain the authority to levy VAT on six petroleum products listed under the State List of the Seventh Schedule of the Constitution, including Aviation Turbine Fuel. This is the reason why ATF continues to remain outside the purview of GST.

The Chief Minister informed that airlines pay VAT and central excise duty on ATF while purchasing fuel from oil companies. ATF accounts for nearly 40 percent of the total operational cost of airlines. Consequently, high tax rates have a direct impact on air ticket prices and the financial health of the aviation sector. Recent global geopolitical developments have further intensified these challenges. She further stated that VAT on ATF is estimated to generate annual revenue of around Rs 1,368 crore, accounting for nearly 19 percent of the Delhi Government’s total annual VAT collection. As a result, VAT on ATF continues to remain a significant source of revenue for the Delhi Government.

Chief Minister Rekha Gupta also clarified that Delhi Airport currently remains the country’s largest aviation hub. During 2024-25, nearly 8 crore passengers were recorded at the Indira Gandhi International Airport, the highest in the country. She said that the Delhi Government remains committed to promoting aviation, tourism, trade, logistics, and investment, and is continuously working to maintain the national capital as the country’s strongest economic and connectivity centre. The Chief Minister reiterated that the Government’s decision will remain in force for six months for the time being. She further stated that the Delhi Government has taken this decision in line with the broader national vision articulated by Prime Minister Narendra Modi to ensure that no disruption is caused in the aviation and tourism sectors.