Important Keyword: Aircraft MRO GST rate India, Notification 02 2020 CT Rate, 5 percent MRO GST ITC, aviation maintenance GST change, GST MRO notification India
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[F. No. 354/32/2020- TRU]
Government of India
Ministry of Finance
(Department of Revenue)
New Delhi, the 26th March, 2020
Notification No. 02/2020 - Central Tax (Rate): Seeks to amend Notification No. 11/2017-Central Tax (Rate) dt. 28.06.2017 reducing CGST rate on Maintenance, Repair and Overhaul (MRO) services in respect of aircraft from 18% to 5% with full ITC.
GST: [TO BE PUBLISHED IN THE GAZZETE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]
G.S.R.....(E).- In exercise of the powers conferred by sub-section (1), (3) and sub-section (4) of section 9, sub-section (1) of section 11, sub-section (5) of section 15 and section 148 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council,
Hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue) No.11/2017- Central Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number G.S.R. 690(E), dated the 28th June, 2017, namely:-
In the said notification, in the Table, against serial number 25,
(i). after item (i) and entries relating thereto, in columns (3), (4) and (5), the following items and entries shall be inserted, namely, -
| (3) | (4) | (5) |
| “(ia) Maintenance, repair or overhaul services in respect of aircrafts, aircraft engines and other aircraft components or parts. | 2.5 | - |
(ii). in item (ii), in column (3), after the brackets and figures “(i)”, the word, brackets, and figures “and (ia)” shall be inserted.
2. This notification shall come into force with effect from the 1st day of April, 2020.
(Pramod Kumar)
Director to the
Government of India
Note: - The principal notification No. 11/2017 - Central Tax (Rate), dated the 28th June, 2017 was published in the Gazette of India, Extraordinary, vide number G.S.R. 690 (E), dated the 28th June, 2017 and was last amended by notification No. 26/2019 - Central Tax (Rate), dated the 22nd November, 2019 vide number G.S.R. 870 (E), dated the 22nd November, 2019.
📚 Frequently Asked Questions (FAQs): Notification No. 02/2020 – Central Tax (Rate)
Q1: What is Notification No. 02/2020 – Central Tax (Rate)?
Answer:
It reduces GST on aircraft MRO services from 18% to 5% with full ITC, effective 01 April 2020.
Q2: Does the reduced rate cover components and engines?
Answer:
Yes — includes aircraft, engines, components, and parts.
Q3: Who is eligible to avail ITC under this notification?
Answer:
Registered taxpayers providing taxable outward supply including airlines & MRO operators.
Q4: Does this apply to only scheduled airlines?
Answer:
No — applicable to all civil aviation operators.
Q5: Is GST exempt for Defense aircraft MRO?
Answer:
No GST exemption — only rate reduction is allowed.
Q6: Will this impact export of MRO services?
Answer:
Yes — exports remain zero-rated with refund of ITC.
Q7: Are airport hangar charges also reduced to 5%?
Answer:
No — this applies only to MRO services.
Q8: Does this cover software diagnostic services for aircraft?
Answer:
Yes — if directly related to repair/maintenance.
Q9: Can ITC be claimed on imported spare parts?
Answer:
Yes — as long as used in taxable MRO services.
Q10: Do foreign airlines operating in India benefit?
Answer:
Yes — lower cost encourages using Indian MRO facilities.
Q11: Is reverse charge mechanism (RCM) impacted?
Answer:
No — RCM rules remain unchanged.
Q12: Should businesses update ERP & rate master?
Answer:
Yes — to avoid wrong invoicing & tax exposure.
Q13: Is GST compliance still required even if rate is reduced?
Answer:
Absolutely ✔
👉 https://finodha.in/gst-return-filing/
Q14: Can startups register for MRO services under GST?
Answer:
Yes — and full ITC makes them competitive.
👉 https://finodha.in/online-gst-registration/
Q15: What if GST was wrongly charged @18% after 01.04.2020?
Answer:
Issue credit note and adjust liability in returns.
🏁 Conclusion
Notification No. 02/2020 – Central Tax (Rate) is a game-changer for India’s aviation ecosystem:
✔ Cheaper aircraft maintenance
✔ Encourages airlines to stay in India
✔ More jobs + aerospace skill growth
✔ Strengthens India's position as a global MRO hub
To ensure accurate GST rate application & full ITC:
👉 Consult Finodha GST Experts Today
https://finodha.in/gst-compliance/
Download PDF: Notification No. 02/2020 – Central Tax (Rate)
More Information: https://taxinformation.cbic.gov.in/
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