Delhi govt cuts VAT on Aviation Turbine Fuel to 7% after Maharashtra amid West Asia war

The Rekha Gupta-led Delhi government on Saturday cut the value-added tax on Aviation Turbine Fuel (ATF) from 25% to 7%, according to officials. This follows the Maharashtra government’s implementation of a similar move, reducing VAT from 18% to 7% for six months starting May 15. The decision comes amid global fuel market instability triggered by the ongoing war in West Asia.

The decision was approved during a Cabinet meeting chaired by Chief Minister Gupta, as per an official statement.

"Delhi government has decided to reduce the value-added tax (VAT) on aviation turbine fuel (ATF) from the existing 25 per cent to 7 per cent, a move which is likely to benefit the airlines and common passengers," PTI quoted an official statement as saying.

Maharashtra slashes VAT on ATF to 7%

"The concession will remain in force from May 15 to November 14, after which the previous rate would apply unless extended or modified by the government. The amendment substitutes the existing 18 per cent tax rate with 7 per cent in Entry 6 of Schedule B appended to the Maharashtra Value Added Tax Act 2002," a notification said.

The decision was officially notified by the state Finance Department on May 14 under the Maharashtra Value Added Tax Act, 2002. Officials said the VAT cut is expected to reduce aviation fuel costs for airlines and may also enhance air connectivity while boosting the competitiveness of airports in the state.

Small-scale industries in MP call for rate cut amid high VAT on PNG

Meanwhile, Micro, small and medium enterprises (MSMEs) in Madhya Pradesh on Wednesday called for a reduction in the 14% value added tax (VAT) imposed on piped natural gas (PNG) used for industrial purposes in the state, reported PTI.

Industry bodies said that rising fuel prices due to the West Asia crisis have pushed up production costs for MSMEs, while the high VAT on PNG is placing them at a competitive disadvantage compared to businesses in neighbouring states.

The issue was flagged during a meeting of the Goods and Services Tax (GST) Grievance Redressal Committee held in Indore, where the Association of Industries Madhya Pradesh highlighted concerns over the high tax on industrial PNG usage.

“Fuel prices have already increased significantly due to the West Asia crisis. The 14 per cent VAT on PNG for industrial use in Madhya Pradesh is placing a significant burden on the production costs of MSMEs. Due to the high VAT, Madhya Pradesh's MSMEs are lagging behind enterprises in neighbouring states in their competitiveness,” Association President Yogesh Mehta said while speaking to PTI.

He further said that in neighbouring states, the VAT on piped natural gas (PNG) for industrial use ranges between 3 and 5%.

Mehta noted that since PNG is not currently covered under GST, industries are unable to claim input tax credit on its purchase.

The meeting of the GST Grievance Redressal Committee was attended by representatives from industry and the business community, along with tax officials from both the central and state governments. Industry stakeholders also reportedly urged the authorities to make the GST return filing process simpler and more streamlined.