In a significant move aimed at providing relief to the aviation sector and promoting Delhi as a competitive aviation hub, the Government of the National Capital Territory of Delhi, through the Finance (Revenue-I) Department, has issued a Notification bearing F. No. 3(22)/Fin(Rev-I)/DS-I/467 dated 17th May, 2026, amending the Fourth Schedule of the Delhi Value Added Tax Act, 2004 (Delhi Act 3 of 2005).
The Lt. Governor of the National Capital Territory of Delhi, being of the opinion that it is expedient in the interest of the general public so to do, has, in exercise of the powers conferred by sub-section (1) of Section 103 of the Delhi Value Added Tax Act, 2004, made the said amendment in the Fourth Schedule appended to the Act.
As per the amendment, in the Fourth Schedule, in the Table, against the entry at Serial No. 14 relating to “Aviation Turbine Fuel (ATF)”, in the column pertaining to rate of tax, the existing entry has been substituted with a revised rate of tax of “7 paisa in the rupee” (i.e., 7%) on Aviation Turbine Fuel (ATF). This effectively reduces the Value Added Tax (VAT) leviable on ATF supplied within the territory of Delhi.
The reduction in VAT on ATF is expected to bring down the operational cost of airlines significantly, as fuel constitutes one of the largest components of airline operating expenses. The move is likely to translate into lower airfares for passengers, encourage airlines to add more flights to and from Delhi, and enhance Delhi’s competitiveness vis-à-vis other Indian States and neighbouring airports that already offer lower VAT rates on ATF.
The decision is in line with the Central Government’s policy push for the UDAN (Ude Desh ka Aam Naagrik) scheme and the broader objective of making air travel affordable and accessible to common citizens. It is also expected to give a boost to regional connectivity, cargo operations, MRO (Maintenance, Repair and Overhaul) activities, and overall growth of the civil aviation ecosystem in the National Capital Region.
It has been specifically provided in the notification that this notification shall remain in force for a period of six months commencing from the date of its publication in the Official Gazette. Accordingly, the reduced VAT rate of 7 paisa in the rupee on ATF shall be effective from 17th May, 2026 and shall continue to operate up to and including 16th November, 2026, unless extended, modified or rescinded by a fresh notification by the Government.
Dealers, airline operators, oil marketing companies and other stakeholders engaged in the sale or purchase of Aviation Turbine Fuel (ATF) within the National Capital Territory of Delhi are advised to take note of the revised VAT rate and ensure compliance with the amended provisions of the Fourth Schedule of the Delhi Value Added Tax Act, 2004, with effect from 17th May, 2026.
The Notification can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/05/Delhi-Finance-NOTIFICATION-17.05.2026.pdf
