GST Council may set a Uniform 5% GST Rate for Commercial Drones

The Goods and Services Tax (GST) Council is allegedly considering a standard 5% GST rate on all commercial-use drones, to bring clarity to the drone technology industry.

According to a report, citing sources, the Council may fix the GST rate at its next meeting to clear up misunderstandings over the classification of unmanned aircraft systems (UAS).

The fitting committee suggested a 5% rate for all types of drones at its latest meeting after the industry requested clarification from the Council. According to one source, the proposed standard rate is expected to streamline taxation and stimulate widespread usage of drones across diverse sectors.

Currently, GST rates vary for various types of drones. Drones used commercially are taxed at 5%, whereas drones with inbuilt cameras are taxed at 18%. Drones for personal use presently attract a 28% GST.

The move comes at a time when India’s drone sector has grown rapidly in recent years as a result of the Centre liberalising the industry’s restrictions. The government has launched a production-linked incentive plan for the drone sector, as well as the ‘Namo Drone Didi’ scheme, to encourage the usage of drone technology in agriculture.

Drones are now employed in a variety of industries, including agriculture, healthcare, disaster management, traffic control, and logistics, in addition to military uses.

According to a 2024 report, the Indian drone market is predicted to reach $13 billion by 2030, with a 21% CAGR between 2022 and 2030.

Listed firms such as IdeaForgeI and DroneAcharya, as well as startups such as Marut Drones, General Aeronautics, Drone Destination, and Garuda Aerospace, have established themselves in the country’s fast-expanding drone sector.

After the report surfaced, shares of both listed drone companies increased by about 5% intraday today. On the BSE today, ideaForge soared 4.62% to INR 401.30, and DroneAcharya increased 4.9% to INR 67.96.

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