A uniform integrated goods and services tax (IGST) rate of 5 per cent has been implemented on all aircraft and aircraft engine parts, effective from July 15, 2024.
The tax rate earlier ranged between five per cent and 28 per cent. The uniform rate was recommended in June 2024 by the GST Council, and would apply to the imports of parts, components, testing equipment, tools and toolkits of aircraft.
The move is likely to boost the domestic maintenance, repair and overhaul (MRO) industry. It also aims to overcome challenges due to varied tax rates on aircraft components including accumulation of GST in MRO accounts and an inverted duty structure.