The Goods and Services Tax (GST) Council may introduce a 5% GST rate on all commercial-use drones in its forthcoming 56th meeting, according to a report by Business Standard. 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, in its last meeting, recommended a 5 per cent rate for all types of drones after industry representatives urged the Council to resolve classification issues. The proposed uniform rate is expected to streamline taxation and encourage the widespread adoption of drones across multiple sectors.”
At present distinct sorts of drones draw varying GST rates based on their classification under distinct Harmonized System Nomenclature (HSN) codes. Business-use drones, classified as aircraft under HSN code 8806, are levied to tax at 5 per cent, while drones with integrated cameras come under HSN 8525 and are within 18 per cent GST rate as they are categorized as digital cameras. Under HSN 8806, drones for personal use are listed and are imposed to tax at a much higher rate of 28%.
Read Also: GST Advisory: Phase III HSN Code Mandatory in Table 12 of GSTR-1/1A from Jan 2025
Measures are been specified by the Indian government 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.
Specific regulations through the Drone (Amendment) Rules, 2023, have been relaxed by the Ministry of Civil Aviation, expanding the scope for micro and nano drones for non-commercial purposes. Also initiatives like ‘Namo Drone Didi’ have been launched to authorize women-led self-help groups in the agricultural sector.
After amendments to government notifications in December 2021, the classification confusion has emerged which directed to 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. It was claimed by industry experts that drones must be categorized based on their main operation-airborne mobility instead of additional accessories, Business Standard notified.
Source: Business Standard
