5% IGST on all aircraft and aircraft engine parts: Rammohan Naidu

New Delhi: Union Civil Aviation Minister, Mr Kinjrapu Rammohan Naidu on Monday announced the implementation of a uniform Integrated Goods and Services Tax (IGST) rate of 5% on all aircraft and aircraft engine parts. This will be effective from July 15, 2024. This decision marks a significant milestone for the domestic Maintenance, Repair, and Overhaul (MRO) industry, aimed at making India a global aviation hub, the Civil Aviation Ministry officials said.

Commenting on this development, Mr Naidu said, "The introduction of a uniform 5% IGST rate on MRO items is a major boost for the aviation sector. 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 Union Minister 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 22nd June 2024, the uniform 5% IGST rate aims to reduce operational costs, resolve tax credit issues, and attract investment.

Highlighting the future prospects, Mr Naidu stated, "Our vision is to transform India into a leading aviation hub. The Indian MRO industry is projected to become a $4 billion industry by 2030. This policy change is a crucial step towards building a strong ecosystem for MRO services, driving innovation, and ensuring sustainable growth… The Ministry is confident that this move will significantly enhance the competitiveness of the Indian MRO sector, fostering innovation and efficiency, and creating a robust and efficient aviation sector.”