Maharashtra extended its 7% VAT on jet fuel until April 14, 2027, to help airlines manage high costs. The state government notified this change on November 12. This move keeps the tax rate low for carriers refuelling in the state, as fuel expenses often take up half of their total operating costs.
Airlines operating through major aviation hubs in Maharashtra are securing extended cost relief as surging operational expenses continue to weigh on margins. This state-level tax concession arrives alongside broader federal interventions aimed at stabilizing fuel prices across domestic networks. Discover how varying regional tax structures are impacting carrier profitability nationwide.
Airlines refuelling in Maharashtra will continue to pay a lower tax on aviation turbine fuel (ATF) for another five months, after the state government extended its 7% value-added tax (VAT) rate until April 14, 2027.
The extension was notified by the Maharashtra Finance Department on November 12, three days before the existing concession was due to expire. The latest order amends the notification issued in May, replacing November 14, 2026, with April 14, 2027, as the end date for the reduced tax rate.
The VAT concession applies to duty-paid aviation turbine fuel. The rate remains unchanged at 7%; the government has not announced a further reduction.
Why did Maharashtra reduce VAT on aviation fuel?
Maharashtra had cut VAT on ATF from 18% to 7% for six months from May 15, 2026. The move came as airlines faced a sharp increase in fuel expenses amid disruptions to international flight operations caused by the West Asia conflict.
The Centre had also been engaging with state governments to bring down aviation fuel taxes, which add to the operating expenses of airlines.
At the time of the original reduction, Union Civil Aviation Minister Kinjarapu Ram Mohan Naidu said Maharashtra had 16 operational airports handling around 75 million passengers annually. He said the lower tax rate would help airlines manage operating expenses and potentially contain pressure on airfares.
The latest extension allows carriers to continue benefiting from the same concession through the coming months.
Why does the VAT rate on ATF matter to airlines?
Fuel is among the largest expenses for airlines, accounting for around 40-50% of their operating costs, according to estimates cited in industry reports.
ATF is currently outside the goods and services tax (GST) regime. This allows individual states to impose VAT at different rates, creating differences in the cost of refuelling across airports.
According to a December 2025 reply by the Civil Aviation Ministry in Parliament, VAT rates on aviation turbine fuel across states and Union Territories ranged from zero to 29%. The ministry said 21 states and Union Territories had reduced their rates following discussions with the Centre.
Maharashtra's decision is particularly relevant to airlines operating through major airports in the state, including Mumbai, which is one of India's busiest aviation hubs.
Other measures to ease aviation costs
The VAT extension comes amid a series of measures taken by the Centre to address rising expenses in the aviation industry.
In April 2026, the Civil Aviation Ministry announced a temporary 25% reduction in landing and parking charges for domestic airlines, while limiting the increase in domestic ATF prices to 25%.
In June, the Union Cabinet approved financial support of up to ₹10,000 crore for oil marketing companies to help stabilise aviation fuel prices for Indian airlines.
The Civil Aviation Ministry has said ATF typically accounts for nearly 40% of airline operating expenses, although the share can rise to 60% during periods of extreme fuel-price volatility.
The Maharashtra notification does not specify the estimated revenue loss to the state from extending the lower VAT rate.