India reforms tax regime for aerospace MRO

15 March 2020

The Indian Ministry of Finance (MoF) has announced tax reforms for the aerospace maintenance, repair, and overhaul (MRO) sector.

In a statement on 14 March, the MoF said the move, which applies to both commercial and military aircraft, is “likely to assist in [the] setting up of MRO services in India”.

Under the reforms, the goods and services tax (GST) rate on aerospace MRO services will be reduced from 18% to 5% with “full ITC”, said the MoF. ITC stands for input tax credit, a means to reduce tax liability.

In addition, the MoF said that it will “change the place of supply for B2B (business-to-business) MRO services to the location of the recipient”.

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