Maharashtra Slashes VAT on Aviation Fuel to Boost Air Connectivity

The Maharashtra government has made a strategic decision to cut Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) from 18% to 7%, effective for six months from May 15. This initiative, outlined in an official notification by the state's Finance Department, could significantly alleviate operational costs for airlines.

Scheduled to run until November 14, the VAT reduction seeks to enhance air connectivity and boost the competitiveness of airports within Maharashtra. It substitutes the current 18% rate with a more favorable 7% as per the amendment in the Maharashtra Value Added Tax Act 2002.

Despite the expected advantages to the airline industry, this measure poses a financial challenge for the state, resulting in an estimated revenue loss of Rs 600 crore, according to the finance department.

(With inputs from agencies.)