NEW DELHI: India has implemented a uniform 5% tax rate for all imports of aircraft components and aircraft engine parts. This decision was recommended by India's Goods and Services Tax (GST) Council in June and came into effect on Monday, July 15, 2024. The previous tax rates for these imports varied between 5% and 28%.

The implementation of this uniform tax rate is expected to have several benefits. It will simplify the tax structure, eliminate disparities, and foster growth in the Maintenance, Repair, and Overhaul (MRO) sector. This move is particularly significant as India's aviation market is one of the fastest-growing in the world, with the aircraft fleet expected to increase from 700 to over 1,500 by 2030.

The uniform tax rate will also boost local MRO businesses and make India's MRO industry a global aviation hub. It will reduce operational costs, resolve tax credit issues, and attract investment. The Indian MRO industry is projected to become a $4 billion industry by 2030.

Overall, the implementation of a uniform 5% tax rate for all aircraft components and aircraft engine parts in India is a significant step towards simplifying the tax structure, fostering growth in the MRO sector, and positioning India as a global aviation hub.

(With Inputs From International Agencies)