Maharashtra extends 7% VAT on aviation turbine fuel till April 14

The Maharashtra government has extended the concessional 7% value-added tax (VAT) on aviation turbine fuel (ATF) it announced in May by five months, until April 14, 2027, allowing airlines to continue paying the lower rate.

In a notification dated November 12, the state finance department extended the existing tax concession, which was due to expire on November 14. The tax cut earlier this year came after global crude oil prices rose and the West Asia conflict disrupted airline operations, pushing up carriers’ operating costs.

"Whereas, in exercise of the powers conferred by sub-section (1) of section 9 of the Maharashtra Value Added Tax Act, 2002 (Mah, IX of 2005), the Government of Maharashtra has, vide Government Notification, Finance Department No. MVAT. 2026/C.R. 28 /Taxation -1, Dated the 14th May 2026, amended the SCHEDULE 'B' appended to the said Act and has reduced the rate of tax on the Aviation Turbine Fuel (Duty paid) to seven per cent. for the period commencing from the 15th May 2026 and ending on the 14th November 2026," the notification said.

"..And whereas, the Government considers it expedient to extend the said rate of tax on the Aviation Turbine Fuel (Duty paid) till the 14th April 2027," it added.

On May 14, the state government had reduced the VAT on ATF from 18% to 7% for six months, with effect from May 15. The earlier tax structure included an 18% levy at Mumbai, Navi Mumbai and Pune airports.

ATF is among the largest expenses for airlines, accounting for around 40-50% of their total operating costs.

To be sure, reducing fuel taxes helps ease some of the cost pressure on airlines, although the extent of the benefit depends on various operating expenses.