The GST Council is expected to introduce a uniform 5% GST rate on all commercial drones in its upcoming meeting, according to a report by Business Standard. The move aims to remove confusion in tax classification and provide clarity to the drone industry.
Currently, different types of drones attract different GST rates based on their classification under various Harmonized System Nomenclature (HSN) codes. Business-use drones, categorized as aircraft under HSN code 8806, are taxed at 5% GST. However, drones with integrated cameras fall under HSN 8525 and attract 18% GST, as they are classified as digital cameras. Drones for personal use, despite being listed under HSN 8806, are taxed at a much higher 28% GST.
A source familiar with the matter stated, “The fitment committee recommended a 5% GST rate for all drones after industry representatives raised concerns over classification issues. This uniform tax rate will help streamline taxation and promote drone adoption across sectors.”
The Indian government has been promoting drone usage in key areas such as agriculture, logistics, public safety, and construction. Certain recent policy changes are permitting drones to operate in green zones (airspace up to a height of 400 feet that is not included in restricted zones) without special permits. Certain drone regulations were also relaxed by the Ministry of Civil Aviation through the Drone (Amendment) Rules, 2023, for non-commercial operations of micro and nano drones. Additionally, initiatives such as ‘Namo Drone Didi’ were launched to empower self-help groups operated by women in agriculture.
The ambiguity regarding GST rates on drones was created after government notices were revised in December 2021, resulting in multiple slabs of tax. One of the major points of worry has been tax treatment for drones with removable cameras, as tax authorities sometimes charged an 18% GST by treating them as camera equipment rather than aircraft. Industry experts say that drones need to be classified on the grounds of their main function—airborne mobility—instead of accessories.
Uniform implementation of a 5% GST would clarify these uncertainties and encourage greater utilization of drones in business sectors.
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Source: Moneycontrol.
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