GST 2.0: Tax on drones cut; premium airfares will gain altitude

The GST Council's latest rate decisions announced late Wednesday have reduced the producer tax incidence on the makers of drones and flight simulators.

GST on unmanned aircraft has been cut to 5% from 28%/18%, a sharp reduction that lowers entry costs for operators deploying drones in logistics, agriculture and mapping.

Flight and target motion simulators - critical for pilot training - have been exempted from IGST, slashing the outgo on new training equipment for airlines and academies.

"The reforms have been carried out with a focus on the common man. Every tax levied on common man's daily-use items have gone through a rigorous fitting into and in most cases, the rates have come down drastically," Finance Minister Nirmala Sitharaman said at the press conference late Wednesday, explaining the broader thematic thrust of the tax rationalisation.

However, passengers in the front of the aircraft cabin will feel the pinch. Non-economy class tickets, until now taxed at 12%, will now draw 18% GST, a hike airlines are expected to pass through in fares. Premium cabins may account for barely 8-10% of seats, but they contribute a disproportionate share of revenue, giving carriers little incentive to absorb the additional levy.

The twin-track decision signals the council's intent of encouraging investment in emerging aviation technologies and training infrastructure, while tightening the tax net on discretionary, luxury flying.