India Simplifies Tax on Aircraft and Engine Parts to Boost MRO Sector

India has standardized the Goods and Services Tax (GST) rate on aircraft components and engine parts to a uniform 5%, effective from July 15. This change aims to enhance the local Maintenance, Repair, and Overhaul (MRO) sector by simplifying the previously complex tax regime with rates varying between 5%, 12%, 18%, and 28%.

“The integration of a uniform 5% GST on MRO items is a major boost for the aviation sector,” said Civil Aviation Minister Kinijrapu Rammohan Naidu. “This new policy eliminates disparities, simplifies the tax structure, and fosters growth in the MRO sector.”

India’s high GST on aircraft components and engine parts had historically driven potential customers to seek services abroad. The new simplified tax regime is expected to reverse this trend, supporting the growth of India’s MRO industry, which is projected to reach USD 4 billion by 2030.

Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com