PANAJI
In a move aimed at reducing the fuel cost burden on airlines and strengthening air connectivity, the Goa government has reduced Value Added Tax (VAT) on aviation turbine fuel (ATF) from 15 per cent to 7 per cent, with the revised rate coming into effect from October 24.
The reduction is expected to bring some relief to airlines, but its impact on airfares remains uncertain.
The reduction of eight percentage points follows similar moves by Delhi, Maharashtra and Tamil Nadu, which have also brought down VAT on aviation turbine fuel ranging from 7 per cent to 16 per cent.
The Finance Department issued a notification on October 23 amending Schedule C of the Goa Value Added Tax Act, 2005. The revised rate applies to the specified category of aviation turbine fuel not covered under the preceding entry in the schedule.
Aviation turbine fuel is one of the largest operating expenses for airlines. The reduction in VAT is expected to lower the tax component of fuel purchases made by airlines refuelling in Goa, potentially easing their operating costs.
IndiGo welcomed the decision, thanking Chief Minister Pramod Sawant for rationalising VAT on aviation turbine fuel.
In a post on X, the airline said the move would help strengthen the aviation ecosystem, enhance air connectivity and support Goa's tourism sector.
The airline also expressed hope that other States would consider similar measures, particularly at a time when aviation fuel costs remain high, to help make air travel more accessible to passengers.
The reduction comes as Goa continues to depend heavily on air connectivity to support its tourism industry. Lower fuel taxation could improve the cost economics of airlines operating flights to and from the state and potentially make refuelling in Goa more attractive, depending on their operational requirements.
While the reduction is expected to provide some relief to airlines, a corresponding reduction in airfares is not guaranteed.
Ticket prices are influenced by several factors, including passenger demand, competition, seat availability, airport charges and other operating expenses. Any savings from lower ATF taxation would depend on the quantity of fuel airlines purchase in Goa and the extent to which the reduction lowers their overall costs.
