India’s GST Council has rationalised taxes on uncrewed aerial vehicles (UAVs), fixing commercial drones at a 5% GST rate. In contrast, defence-use drones and key components are exempt, a change expected to lower costs and remove policy ambiguity for manufacturers and operators. 

The Council has indicated the rate changes will take effect from September 22, 2025, as part of a phased rollout. 

In tandem, the government has clarified and streamlined refunds of accumulated input tax credit (ITC) in inverted-duty cases—measures that should speed up sanction of refunds and ease working-capital pressure on firms. 

BonV Aero, a design-led R&D company supplying logistics drones to the Indian Armed Forces, welcomed the reforms.

“At BonV, we welcome the GST Council’s rationalisation of drone taxation, which sets commercial drones at 5% and exempts defence-use drones and key components from GST. As a design-led R&D house and a proud supplier of logistics drones and other advanced drone solutions to the Indian Armed Forces, this change significantly reduces working capital requirements and removes earlier tax ambiguities.

Importantly, the easing of refunds on past input credits—where components were procured at higher GST rates—will now enable us to pass on savings more effectively to our defence partners, while reinvesting in innovation to advance India’s self-reliance in aerospace technology,” said Satyabrata Satapathy, Co-founder & CEO, BonV Aero.

Why it matters for travel & mobility: Lower GST on UAVs could accelerate the adoption of drone logistics and aerial services supporting remote and high-altitude destinations—improving last-mile supply chains, emergency response, and infrastructure monitoring in tourist regions. BonV Aero has previously disclosed deployments and demonstrations for heavy-payload, high-altitude operations in India, underscoring the sector’s relevance to both defence and civil logistics.

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