Tamil Nadu slashes aviation fuel tax to boost airline operations

Tamil Nadu has announced a major reduction in VAT on aviation turbine fuel as part of efforts to make air operations more cost-competitive across the state. The rate at Chennai airport, the state's primary aviation hub, has been reduced from 29% to 16%, effective immediately.

The tax relief extends beyond Chennai, with scheduled airlines fuelling at other airports throughout Tamil Nadu now subject to a VAT rate of just 1%, down from the previous 29%. This represents a dramatic cut aimed at encouraging regional air connectivity and reducing operational costs for carriers.

Smaller aircraft operators will also benefit from the new dispensation. Scheduled airlines operating aircraft with a maximum take-off mass below 40,000 kilograms and fuelling at non-Chennai airports will see their VAT rate reduced to 1% from the earlier 5%.

The move reflects Tamil Nadu's strategy to enhance its position as an aviation hub and support the expansion of both domestic and regional flight networks. By reducing fuel costs through lower taxation, the state aims to attract more airline operations and improve connectivity to smaller cities and towns across the region.

Industry observers expect the tax reductions to have a ripple effect across Tamil Nadu's aviation sector, potentially enabling airlines to offer more competitive fares and increase flight frequencies on key routes.