SP’s Aviation|April 2020
March 14, 2020 was a milestone day in the history of Indian Maintenance, Repair and Overhaul (MRO) Industry. On this day, the Goods and Services Tax (GST) Council at its 39th meeting took some concrete steps to boost the Indian MRO Industry with its recommendation to reduce GST on MRO services in respect to aircraft from 18 per cent to five per cent with full ITC and to change the place of supply for B2B MRO services to the location of the recipient. This change is likely to assist in setting up of MRO services in India. Domestic MRO will also get protection due to five per cent tax paid under section 3(7) of the Customs Tariff Act, 1975 on most imported goods including those sent abroad for repairs, as this tax is available for credit. This comes into effect from April 01, 2020.
MRO Association of India, a not-for-profit professional body, has been engaging with the Ministries of the Government of India to seek this benefit since the introduction of GST in India on July 1, 2017. Earlier, the Association was able to procure a Zero rate of Custom Duties from the Ministry of Finance in its General Budget for Financial Year 2012-13.
The Indian MRO Industry is still in its nascent stage. India has a pool of talent in both experienced and youth categories of human resources. The country also offers the cheapest manhour cost of $43, the lowest in the region, but the high taxation regime was eroding its MRO business. With the much need relief provided by the Government, the Indian MRO Industry now feels that it can turn the tide in its favour.
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