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The Government of Delhi on Saturday reduced the value-added tax (VAT) on Aviation Turbine Fuel (ATF) from 25 per cent to 7 per cent, according to officials.

The move follows a similar decision by the Government of Maharashtra, which reduced VAT on ATF from 18 per cent to 7 per cent for six months beginning May 15.

The decisions come amid volatility in global fuel markets triggered by the ongoing conflict in West Asia.

Delhi Cabinet Approves Tax Reduction

The decision was approved during a Cabinet meeting chaired by Chief Minister Rekha Gupta, according to 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,” the statement said.

Maharashtra’s VAT Cut Effective Till November

In Maharashtra, the revised VAT structure will remain effective from May 15 to November 14.

“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 stated.

The measure was officially notified by the state Finance Department on May 14 under the Maharashtra Value Added Tax Act, 2002.

Officials said the tax cut is expected to reduce aviation fuel costs for airlines, improve air connectivity and strengthen the competitiveness of airports in the state.

MSMEs In Madhya Pradesh Seek PNG VAT Cut

Meanwhile, micro, small and medium enterprises (MSMEs) in Madhya Pradesh have called for a reduction in the 14 per cent VAT imposed on piped natural gas (PNG) used for industrial purposes.

Industry bodies said rising fuel prices linked to the West Asia crisis have increased production costs, while the high VAT on industrial PNG has placed MSMEs at a disadvantage compared to neighbouring states.

The issue was raised during a meeting of the Goods and Services Tax Grievance Redressal Committee in Indore.

Industry Bodies Cite Competitive Disadvantage

Association of Industries Madhya Pradesh president Yogesh Mehta said neighbouring states levy VAT of only 3 to 5 per cent on industrial PNG.

“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,” Mehta said.

He further noted that since PNG is not currently covered under GST, industries are unable to claim input tax credit on purchases.

Industry Seeks Simpler GST Filing System

The GST Grievance Redressal Committee meeting was attended by representatives from industry and the business community, along with tax officials from both the central and state governments.

Industry stakeholders also urged authorities to simplify and streamline the GST return filing process.