Bihar Cuts VAT on Aviation Fuel to 4% for Air Connectivity Boost

The Bihar government has reduced the value-added tax (VAT) on aviation turbine fuel (ATF) from 29% to 4%, with the change now applicable across all airports in the state. The decision was approved during a cabinet meeting held on Tuesday, chaired by Chief Minister Nitish Kumar.

Bihar Cuts VAT on Aviation Fuel

Previously, the reduced VAT rate of 4% was in effect only at Gaya airport. With the new policy, the same rate will now be extended to other airports in Bihar, including those in Patna and Darbhanga. This change is expected to bring uniformity in ATF pricing across the state.

This falls under the Regional Connectivity Scheme (RCS), also known as UDAN. The central government had earlier requested states to reduce VAT on ATF to 4% to improve regional air connectivity. Bihar’s latest step is in line with this request.

Cabinet Approval and Statement

The proposal was submitted by the Commercial Tax Department and received approval from the cabinet. Deputy Chief Minister Samrat Choudhary, who also handles the Finance portfolio, confirmed the development through an official statement after the meeting.

Read more: What is Value Added Tax (VAT) and How to Calculate It?

Impact on Air Traffic and Revenue

According to news reports, the change is aimed at making air travel more viable for airlines operating in the region. With a uniform and lower fuel tax, operational costs may go down, making it more feasible to run flights in and out of Bihar. The government has also linked this step with the possibility of increasing commercial flight operations and boosting revenue collection.

Aims to Boost Tourism

The decision also factors in Bihar’s tourism sector. With several heritage and religious sites in the state, easier and more frequent air access has been cited as one of the ways to support visitor traffic.

Conclusion

The new VAT rate of 4% on ATF is now applicable statewide in Bihar. The policy change is tied to broader connectivity goals and is also a response to central government recommendations.

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