Patna: Bihar has significantly reduced the value-added tax (VAT) on aviation turbine fuel (ATF) from 29% to 4%, in a bid to improve air connectivity, boost tourism, and create employment opportunities. The decision, announced on June 3 by Deputy Chief Minister Samrat Choudhary, positions the state among those aggressively working to expand their civil aviation sector.
The revised VAT rate will now apply not just at Gaya Airport — where a 4% rate was already in place — but across all operational airports in the state, including Patna. However, under the Regional Connectivity Scheme (RCS), the 1% VAT rate will remain unchanged.
Choudhary stated that the earlier 29% VAT made Bihar uncompetitive compared to other states like Uttar Pradesh, Jharkhand, Delhi, Gujarat, and Maharashtra, where lower tax rates had incentivised airlines to refuel. “With this tax cut, Bihar aligns itself with progressive states that have already seen success by reducing VAT on ATF,” he said.
Data from the Commercial Tax Department shows that despite the higher tax rate, the VAT revenue from ATF in 2023–24 was only Rs 62.28 crore — just 0.16% of the department’s total revenue. In 2024–25, this marginally increased to Rs 71.67 crore, accounting for around 0.17% of overall revenue.
Officials expect the lower tax rate to drive a rise in air traffic, make air travel more affordable, and encourage airlines to increase the frequency of flights. “This move is expected to transform Bihar’s tourism and industrial sectors by improving connectivity and generating employment,” Choudhary said.
He added that the decision came in response to a request from the central government and reflects the state’s broader commitment to attracting investment and improving infrastructure.
