Chennai: The Tamil Nadu government has reduced the Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) for scheduled domestic airlines from 29 per cent to 1 per cent at airports across the State other than Chennai, cutting the rate at Chennai airport to 16 per cent.
The tax reduction is aimed at lowering airlines’ operating costs and encouraging the expansion of domestic flight services, particularly from regional airports.
Under the revised rates, the scheduled domestic airlines refuelling at Chennai airport will pay 16 per cent VAT against the existing 29 per cent. At other airports in Tamil Nadu, the rate has been reduced to 1 per cent.
For scheduled airlines operating aircraft with a maximum take-off mass (MTOM) of below 40,000 kg at airports other than Chennai, VAT has been cut to 1% from 5%. ATF accounts for a substantial share of airline operating costs, and its reduction is expected to improve the commercial viability of routes and encourage airlines to increase flight frequencies or introduce new domestic connections.
For scheduled airlines operating aircraft with a maximum take-off mass (MTOM) of below 40,000 kg at airports other than Chennai, VAT has been cut to 1% from 5%. ATF accounts for a substantial share of airline operating costs, and its reduction is expected to improve the commercial viability of routes and encourage airlines to increase flight frequencies or introduce new domestic connections.
The steep reduction in VAT outside Chennai could make regional airports more attractive for airline operations, potentially improving air connectivity between Tamil Nadu’s cities and destinations elsewhere in the country. Better connections could also support tourism, business travel and trade.
However, the extent to which the tax relief translates into additional flights or lower airfares will depend on airlines’ commercial decisions, passenger demand, airport capacity and the viability of individual routes.
While Chennai remains the State’s principal aviation gateway, the revised tax structure could help distribute domestic aviation activity more widely across Tamil Nadu by making operations at regional airports more cost-competitive.
While Chennai remains the State’s principal aviation gateway, the revised tax structure could help distribute domestic aviation activity more widely across Tamil Nadu by making operations at regional airports more cost-competitive.
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