Maintenance, repair or overhaul services of ships and vessels, their engines and other parts will only be taxed at 5% from 2 June onwards, down from the 18% levied earlier
Central Board of Indirect Taxes and Customs (CBIC) has 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 last Friday.
Accordingly, maintenance, repair or overhaul services (MRO) of ships and vessels, their engines and other parts will only be taxed at 5% from 2 June onwards, 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.
CBIC also reduced the GST rate on lymphatic filariasis drug diethylcarbamazine which is supplied to World Health Organisation for a disease eradication programme from 12% to 5% from 2 June, showed a separate notification. The tax authority also rationalised a rule relating to input tax credit use in the case of residential complex construction service provided by a developer, showed another notification. A series of notifications were issued earlier in the week offering compliance relief to businesses in the case of delayed tax payments and return filings.
A ministerial panel set up by the GST Council is currently examining the feasibility of giving more tax concessions on domestically produced drugs, vaccines and other medical supplies used in the prevention and treatment of coronavirus disease. Relief on imported covid related medical supplies have already been given.