56th GST Council Meeting – Highlights & Updates
56th GST Council Meeting – Highlights & Updates
Business Standard reports that the Goods and Services Tax (GST) Council may introduce a 5% GST rate on all commercial-use drones at its forthcoming 56th meeting. The objective is to eliminate ambiguity in the classification of unmanned aircraft systems (UAS) and provide clarity to the industry.
A source told Business Standard, “The fitment committee recommended a 5 per cent rate for all types of drones at its last meeting after industry representatives urged the Council to resolve classification issues. The proposed uniform rate should streamline taxation and encourage the widespread adoption of drones across multiple sectors.”
Currently, distinct sorts of drones draw varying GST rates based on their classification under distinct Harmonized System Nomenclature (HSN) codes. Authorities classify business-use drones as aircraft under HSN code 8806 and levy a 5 per cent tax on them. Drones with integrated cameras fall under HSN 8525 and are within the 18 per cent GST rate because authorities categorize them as digital cameras. Under HSN 8806, authorities list drones for personal use and impose a much higher tax rate of 28% on them.
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The Indian government has specified measures to promote drone usage in sectors such as agriculture, logistics, public safety, and construction. For example, drones can now function in green zones airspace up to 400 feet that are not specified as red or yellow without needing special permissions.
The Ministry of Civil Aviation has relaxed specific regulations through the Drone (Amendment) Rules, 2023, expanding the scope for micro and nano drones for non-commercial purposes. Also, initiatives like ‘Namo Drone Didi’ have launched to authorize women-led self-help groups in the agricultural sector.
After amendments to government notifications in December 2021, classification confusion has emerged, which directed various GST slabs for distinct sorts of drones. The treatment of drones with detachable cameras is the major point of contention.
Often, tax authorities have imposed an 18% GST on these drones by categorizing them as camera equipment rather than as aircraft. Industry experts claimed that authorities must categorize drones based on their main operation—airborne mobility—instead of additional accessories, Business Standard notified.
That was the update of the 56th GST Council Meeting.
