With an aim to making India a global aviation hub, the government has introduced a uniform Integrated Goods and Services Tax (IGST) rate of 5% on all aircraft and aircraft engine parts, effective from July 15, 2024. This decision marks a significant milestone for the domestic Maintenance, Repair, and Overhaul (MRO) industry.
Commenting on this development, Union Civil Aviation Minister, Kinjrapu Rammohan Naidu noted that previously, the varying GST rates of 5%,12%, 18%, and 28% on aircraft components created challenges, including an inverted duty structure and GST accumulation in MRO accounts. This new policy eliminates these disparities, simplifies the tax structure, and fosters growth in the MRO sector.
The Minister further emphasized the role of Prime Minister Narendra Modi's visionary leadership in making this change possible. He said ‘Under the guidance of Prime Minister Modi, we are committed to the Atma Nirbhar Bharat initiative. His support for transforming India into a leading aviation hub has been crucial in driving this policy forward.’
Union Minister also applauded the efforts of the Ministry of Civil Aviation, Ministry of Finance and other stakeholders who have worked diligently to achieve this policy adjustment recommended by the GST Council in its 53rd meeting on June 22, 2024. The uniform 5% IGST rate aims to reduce operational costs, resolve tax credit issues, and attract investment.
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