GST for shipping MRO industry reduced to 5% from 18%

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Central Board of Indirect Taxes and Customs (CBIC) on June 02 notified a reduction in the Goods and Services Tax (GST) rate applicable to ship repairing services offered in India as part of the tax relief approved by the GST Council on May 28.

Central tax rate of 2.5% will be applicable which means maintenance, repair or overhaul services (MRO) of ships and vessels, their engines and other parts will only be taxed at 5%, down from the 18% levied earlier. State governments are expected to notify the same under state laws. Input tax credit will be available at the reduced rate.

The idea is to encourage ship repair services within the country by offering tax relief, the same way MRO services in the airline industry is eligible for the concessional 5% tax rate in India. The idea is to keep the tax rate internationally competitive to help develop these industries.

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