TBM Staff - Mumbai The government has introduced a new 5% uniform Integrated Goods and Services Tax (IGST) rate on all aircraft and aircraft engine parts to stimulate the industry.
According to an official statement, this decision, which is effective immediately, is described as a crucial step forward for the domestic Maintenance, Repair, and Overhaul (MRO) sector, with the aim of positioning India as a prominent global aviation hub.
“The introduction of a uniform 5 per cent IGST rate on MRO items is a major boost for the aviation sector,” Union Civil Aviation Minister Kinjrapu Rammohan Naidu said in the release. Previously, IGST rates on all aircraft and engine parts varied between 5% and 28%.
According to the release, during its 53rd meeting on June 22, the GST Council proposed a consistent 5% IGST rate. This adjustment aims to lower operational expenses, address tax credit complexities, and enhance investment attractiveness.
Previously, differing GST rates of 5%, 12%, 18%, and 28% on aircraft components posed challenges such as inverted duty structures and GST accumulation in MRO accounts, noted Naidu.
“This new policy eliminates these disparities, simplifies the tax structure, and fosters growth in the MRO sector,” he noted.
“We are committed to the Atmanirbhar Bharat initiative. Prime Minister Narendra Modi’s support for transforming India into a leading aviation hub has been crucial in driving this policy forward,” the minister said.
Naidu expressed the government’s aspiration to elevate India into a premier aviation center, noting that the Indian MRO industry is forecasted to reach USD 4 billion by 2030.
“This policy change is a crucial step towards building a strong ecosystem for MRO services, driving innovation, and ensuring sustainable growth,” Naidu emphasised.
The Ministry is optimistic that this initiative will substantially bolster the competitiveness of India’s MRO sector, fostering innovation and efficiency to cultivate a robust and effective aviation industry, as per the release.
