Govt implements uniform 5% tax for all aircraft, aircraft engine parts

July 15, 2024

Synopsis
India has implemented a uniform 5% tax on all imports of aircraft components and engine parts starting immediately, replacing varying rates that previously ranged from 5% to 28%. The decision, recommended by India's GST Council in June, aims to streamline tax rates for items like aircraft parts, testing equipment, tools, and tool-kits.

India will tax all imports of aircraft components and aircraft engine parts at 5%, the civil aviation minister said on Monday, unifying the tax rate which earlier varied between 5% and 28%.

The uniform rate, effective from Monday itself, was recommended by India's Goods and Services Tax (GST) Council in June and will apply to imports of "parts, components, testing equipment, tools and tool-kits of aircrafts".

It was deemed necessary because of "challenges" created by varying tax rates and will be a boost for local maintenance, repair and overhaul (MRO) businesses, Civil Aviation Minister Kinijrapu Rammohan Naidu said, at a time when Indian airlines have placed record orders for jets.

"This new policy eliminates... disparities, simplifies the tax structure, and fosters growth in the MRO sector," the minister said.

India is among the fastest growing major aviation markets, with an aircraft fleet that is expected to increase from the current 700 to over 1,500 by 2030.

[The Economic Times]