Panama pitches its maritime network to Tamil Nadu businesses

The Tamil Nadu government has significantly reduced the value added tax (VAT) rate on aviation turbine fuel (ATF) at Chennai airport, bringing relief to the aviation sector. The VAT rate on ATF for scheduled airlines fuelling at Chennai airport has been lowered from 29% to 16%, effective from November 1, 2026. Additionally, the VAT for ATF at other airports in Tamil Nadu has been reduced from 29% to 1%, applicable to scheduled airlines fuelling at these airports.

For airlines operating aircraft with a maximum take-off mass of less than 40,000 kg at non-Chennai airports, the VAT rate has been further reduced from 5% to 1%. This reduction in VAT rate partially addresses the long-standing demand of the Union government and the aviation sector, as ATF constitutes a significant portion of airlines' operating costs, with VAT being a major influencing factor.

Airlines had been urging the State to decrease the VAT rate on ATF, and the reduction is expected to benefit passengers by enabling improved connectivity and the addition of new flights from Chennai and Tamil Nadu. Maharashtra and Delhi had recently lowered their VAT rates on ATF as well.