TN cuts ATF VAT at Chennai Airport to 16%; Goa reduces rate to 7%

Tamil Nadu and Goa have announced reductions in value-added tax (VAT) on aviation turbine fuel (ATF). Centre has appreciated Tamil Nadu Chief Minister C Joseph Vijay over his government's decision to reduce Value Added Tax (VAT) on aviation turbine fuel (ATF). Tamil Nadu reduced the rate from 29 per cent to 16 per cent at Chennai and one per cent at all airports in the state. In a gazette notification, the government said that the reduction of VAT on ATF will come into effect on the midnight of October 31- November 1 and shall remain in force for a year upto the midnight of October 31, 2027. Announcing the decision on Friday, Tamil Nadu Industries Minister Virudhai Magal Keerthana said the move was a "decisive step" towards making air travel more accessible and regional airports more competitive. "Lower operating costs can encourage airlines to introduce new routes, increase flight frequencies and expand operations beyond Chennai. We are building an aviation ecosystem that connects more regions, unlocks economic potential and powers Tamil Nadu's next phase of growth," Keerthana tweeted.
Union Aviation Minister Ram Mohan Naidu in a post on X said, "Appreciate the Tamil Nadu Government’s decision to reduce VAT on Aviation Turbine Fuel (ATF), a welcome step for the aviation sector."  "Making air travel more affordable requires the Centre and States to work together. Our shared priority must always be the passengers," he added. 
Air India has also thanked Tamil Nadu CM for reducing VAT on Aviation Turbine Fuel (ATF), saying, "Air India expresses its sincere gratitude to the Hon’ble Chief Minister of Tamil Nadu, C Joseph Vijay and the Government of Tamil Nadu for reducing VAT on Aviation Turbine Fuel (ATF)." 

Appreciate the Tamil Nadu Government’s decision to reduce VAT on Aviation Turbine Fuel (ATF), a welcome step for the aviation sector. Thank you to Hon’ble Chief Minister Thiru @TVKVijayHQ for this initiative. Making air travel more affordable requires the Centre and States to work together. Our shared priority must always be the passengers.

— Ram Mohan Naidu Kinjarapu (@RamMNK) October 23, 2026

The Goa notification, issued by the Department of Finance (Revenue and Control) under the Goa Value Added Tax Act, 2005, substitutes the existing entry for ATF with a 7% tax rate for fuel not covered by the preceding entry in the relevant schedule. The notification takes effect on October 24, 2026.Welcoming Goa’s move, Naidu said lower fuel costs could support airlines, strengthen connectivity and provide a further boost to the state’s tourism sector.
The fuel component usually constitutes about 30-40% of operating costs. It has now increased to about 55-60%. Jet fuel prices have been rising relentlessly since the US-Iran war broke out this February.