Dispute over GST rate poses challenge for drone sector
NEW DELHI: Burgeoning unmanned drone sector is facing major challenges as consumers, including the Indian Army, dispute the applicable goods and services tax (GST) rates.
As per sources, this confusion over tax classification threatens to disrupt supply chains and deter investment in the industry. Hence, the fitment committee should look into this critical aspect at the earliest. Sources say the GST rate structure, outlined in Notification No. 18/2021-Central Tax (Rate), has left stakeholders confused.
Unmanned aircraft are classified under three categories with varying tax rates -- 5% for certain applications, 18% for specific use cases, and 28% for others. This complexity has sparked debates over the appropriate classification, particularly regarding unmanned drones without integrated cameras, which some stakeholders believe should fall under 5% rate.
The introduction of a subheading for unmanned aircraft in the Customs Tariff Rules 2022 further complicates the issue as it delineates specific criteria for classification but leaves room for interpretation.
