GST Council May Fix Uniform 5% Rate For Commercial Drones

SUMMARY

The Goods and Services Tax (GST) Council is reportedly looking to finalise a uniform 5% GST rate on all commercial-use drones

Council may fix the GST rate in its next meeting in order to remove confusion in the classification of unmanned aircraft systems (UAS)

Shares of both listed drone companies ideaForge and DroneAcharya surged almost 5% intraday today

To provide clarity to the drone tech industry, the Goods and Services Tax (GST) Council is reportedly looking to finalise a uniform 5% GST rate on all commercial-use drones.

A Business Standard report, citing sources, said that the Council may fix the GST rate in its next meeting in order to remove confusion in the classification of unmanned aircraft systems (UAS).

“The fitment committee, in its last meeting recommended a 5% (rate) for all types of drones after the industry made a representation before the Council to remove the confusion. The proposed uniform rate is expected to streamline taxation and encourage the widespread adoption of drones across various sectors,” one of the sources was quoted as saying.

Currently, GST rates vary for different categories of drones. While drones for commercial purposes are taxed at 5%, drones with integrated cameras are taxed at 18%. Drones for personal use currently attract 28% GST.

The development comes at a time when India’s drone industry has grown by leaps and bounds over the last few years on the back of Centre liberalising the rules for the industry. The government also launched a production linked incentive scheme for the drone sector and ‘Namo Drone Didi’ scheme to increase the adoption of drone technology in the agriculture sector.

As a result, expanding beyond military use, drones are today being used in sectors such as agriculture, healthcare, disaster management, traffic control, logistics, among others.

As per Inc42’s Indian Drone Tech Startup Landscape & Market Opportunity Report 2024, the Indian drone market is expected to reach a size of $13 Bn by 2030, growing at a CAGR of 21% between 2022 and 2030.

Listed companies like IdeaForge

and DroneAcharya, and startups such as Marut Drones, General Aeronautics, Drone Destination, Garuda Aerospace, among others, have made a name for themselves in the rapidly expanding drone sector in the country. .

After the Business Standard report surfaced, shares of both listed drone companies surged almost 5% intraday today. While ideaForge jumped 4.62% to INR 401.30, DroneAcharya rose 4.9% to INR 67.96 on the BSE today.

Last month, DroneAcharya received the Directorate General of Civil Aviation’s (DGCA) type certification for its multipurpose drone, AgriVeer.

Earlier this month, it bagged an INR 46.25 Lakh project from consulting firm EY to focus on advanced drone training in Nepal under a six-month project called “Nepal drone ecosystem acceleration program”.