'Our shared priority must always be...': Ram Mohan Naidu thanks Tamil Nadu CM Vijay for cutting VAT on ATF

Tamil Nadu’s decision to sharply reduce taxes on aviation fuel has drawn appreciation from Union Civil Aviation Minister Ram Mohan Naidu, who said cooperation between the Centre and states was essential to making air travel more affordable. The move comes as the state government seeks to ease the tax burden on airlines operating from its airports.

Under the revised tax structure, the Tamil Nadu government has reduced Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) from 29% to 16% at Chennai airport. At other airports across the state, the rate has been brought down to 1%.

The changes were notified by the state’s Commercial Taxes and Registration Department through an extraordinary gazette notification dated October 23, 2026. The revised rates will take effect from November 1, 2026, and remain in force until October 31, 2027.

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What Ram Mohan Naidu said about Tamil Nadu’s decision

Naidu welcomed the tax reduction in a post on X, thanking Tamil Nadu Chief Minister C Joseph Vijay for the initiative.

“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,” the minister wrote.

He also stressed that making air travel affordable required joint efforts by the Centre and state governments.

“Our shared priority must always be the passengers,” Naidu added, underlining the importance of cooperation in addressing the cost pressures faced by the aviation industry.

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What the new ATF VAT rates mean

The revised rates apply to aviation fuel sold by oil companies to scheduled airlines for domestic flights. Under the notification, airlines will have to submit a declaration signed by the purchaser along with their monthly tax returns to establish that the fuel is intended for domestic aviation operations.

ATF is a significant component of airline operating expenses. A reduction in VAT can lower the tax component of fuel purchases, potentially helping airlines manage costs and improve the economics of operating flights.

The cut to 1% at airports outside Chennai is particularly significant for regional aviation, as it reduces the tax rate by 28 percentage points. At Chennai airport, the reduction from 29% to 16% represents a 13-percentage-point cut.