IndiGo, SpiceJet shares in focus as Maharashtra cuts ATF VAT to 7%

InterGlobe Aviation and SpiceJet shares are expected to remain in focus after the Maharashtra government reduced Value Added Tax (VAT) on Aviation Turbine Fuel (ATF) in Mumbai to 7% from 18%.

According to a notification issued by the Maharashtra Finance Department, the revised VAT structure will come into effect from May 15, 2026, and remain applicable until November 14, 2026.

The move is considered positive for airline companies as ATF remains one of the largest components of operating costs for carriers. Lower fuel taxation is expected to reduce operational expenses for airlines operating flights from Mumbai, one of India’s busiest aviation hubs.

The notification stated that the Maharashtra government amended Schedule ‘B’ under the Maharashtra Value Added Tax Act, 2002, substituting the earlier 18% tax rate with 7% for the specified period.

Market participants believe the tax reduction could support profitability for aviation companies, especially at a time when global crude oil prices remain elevated. Lower ATF taxes may also help airlines improve margins and operational efficiency.

The development is expected to benefit carriers with significant domestic operations and large exposure to metro routes, including IndiGo and SpiceJet. Other aviation players such as Air India could also benefit from the lower fuel costs.

ATF typically accounts for a substantial portion of airline operating expenditure, making state-level tax reductions an important factor for the sector’s profitability outlook.

The Maharashtra government’s decision is also aimed at improving Mumbai’s competitiveness as an aviation hub and supporting overall airline traffic growth.

Disclaimer: This article is for informational purposes only and should not be construed as investment advice.