Maharashtra cuts VAT on aviation fuel to 7% for six months amid West Asia crisis

Maharashtra has reduced value added tax (VAT) on aviation turbine fuel (ATF) to 7% from 18% for six months beginning Friday, May 15, to ease cost pressures on airlines grappling with operational disruptions and higher fuel prices due to the ongoing West Asia crisis.

Civil Aviation Minister Ram Mohan Naidu said the reduction would help keep airfares in check at a time when the aviation industry is facing challenges such as airspace closures, uncertain operations and a spike in ATF prices.

In a post on X, the minister said the central government had extended several forms of support to airlines, including capping of ATF prices for domestic scheduled operators, reduction in airport charges and an emergency credit linkage scheme.

“One of the important expenditures in aviation industry is the VAT on ATF that is levied by state governments. Ministry of Civil Aviation has been engaging with state governments to reduce this VAT since some time, and specifically during the crisis times,” he said.

Naidu thanked Maharashtra Chief Minister Devendra Fadnavis for “rising to the occasion” and notifying the tax cut with effect from May 15.

According to a notification issued by the Finance Department of the Maharashtra government, the lower 7% VAT rate will remain in force from May 15 to November 14, 2026, under the Maharashtra Value Added Tax Act, 2002.

The amendment substitutes the existing 18% VAT rate with 7% for ATF listed under Schedule B of the Act.

Maharashtra has 16 operational airports and handles the highest annual passenger traffic among states, with around 75 million passengers annually and about two lakh passengers daily, the minister said.

He said the tax reduction would benefit flight operations across all airports in the state and help a large number of passengers by containing upward pressure on airfares caused by global developments.

The West Asia conflict has led to temporary closure of airspace in parts of the region, forcing airlines to reroute flights and incur higher fuel and operating costs.