India slashes GST for aircraft MRO from 18% to 5% to boost local business

March 16, 2020: The Goods and Services Tax (GST) council has slashed the tax rate on aircraft maintenance, repair and overhaul (MRO) services from 18 percent to 5 percent which will come to effect from April 1, 2020 and is expected to boost the domestic MRO industry.

The 39th GST council was chaired by union finance minister Nirmala Sitharaman and attended by union minister of state for finance Anurag Thakur along with finance ministers of states & UTs and seniors officers of the ministry of finance. The move is supposed to help Indian MRO service providers to invest more in infrastructure and capabilities due to the level playing field with foreign companies.

“To reduce GST rate on Maintenance, Repair and Overhaul (MRO) services in respect of aircraft from 18% to 5% with full ITC and to change the place of supply for B2B MRO services to the location of recipient. This change is likely to assist in setting up of MRO services in India. Domestic MRO will also get protection due to 5% tax paid under section 3(7) of the Customs Tariff Act, 1975 on most imported goods (sent abroad for repairs) as this tax is not available as credit,” says the PIB release.

Union Minister for Finance & Corporate Affairs Smt. @nsitharaman chairing the 39th GST Council meeting in New Delhi today. pic.twitter.com/asjeeQfL6C

— Ministry of Finance (@FinMinIndia) March 14, 2020