Tamil Nadu reduces ATF VAT, draws praise from Centre
What's the story
The Tamil Nadu government has slashed the Value Added Tax (VAT) on aviation turbine fuel (ATF) across all state airports. The VAT rate has been reduced from 29% to 16% at Chennai airport and to 1% at other airports. This move comes as a major relief for airlines struggling with rising crude prices and high operating costs.
Government response
Civil aviation minister praises TN government's decision
Civil Aviation Minister Ram Mohan Naidu praised the Tamil Nadu government's decision to cut ATF VAT.
He emphasized the importance of cooperation between the Centre and states in making air travel more affordable.
"Making air travel more affordable requires the Centre and states to work together," he said.
The increase in jet fuel prices has been a major concern for airlines, accounting for 30-40% of their operating costs. This percentage has now risen to 55-60%.
Economic impact
Potential impact on flight operations and airfares
The ongoing US-Iran conflict and the closure of Pakistani airspace have further complicated matters for Indian carriers.
The Federation of Indian Airlines had warned that high ATF prices could force them to cut flights on unviable routes.
The tax reduction is expected to lower operating costs and possibly moderate airfares.
Tamil Nadu Industries Minister Virudhai Magal Keerthana called the decision a "decisive step" toward making air travel more accessible and competitive.
Official announcement
Gazette notifications on tax reduction
The Tamil Nadu government has issued three gazette notifications regarding the tax reduction.
The first notification reduces jet fuel taxes at Chennai airport from 29% to 16%. The second reduces the rate at other airports from 29% to 1%.
A third concession reduces VAT on fuel for smaller aircraft outside Chennai from 5% to 1%.
These reductions will remain in force until October 31, 2027.