GST Exemption on Satellite launch to encourage the domestic launch

Rajdeep Saini

10 Sep, 2022

The exemption of goods and sales tax will facilitate to protect the local satellite industry and further develop homegrown launch capabilities without the upfront GST burden and give it a level playing field. The Central Government with the motive to encourage domestic launching of the Satellites by Indian Space Research Organization (ISRO) and Antrix Corporation (the commercial arm of ISRO), the GST Council has determined that 18% of GST will entirely be scrapped. The startups that are developing satellites will not be liable to pay GST now when they choose Indian launch vehicle.

However, it was not made understandable whether this relief will be extended to private launch companies. The private firms in this sector have said that there will not be a level playing field if such a thing doesn’t happen.

Notification of GST exemption by GST Council

A notification by GST Council dated 16^th October 2020 that aims to amend Notification No. 12 / 2017 Central Tax (Rate) the 28th June 2017 which be valid to exemptions on the supply of services under GST Act. Serial number 19 C is added in order to excuse Satellite launch services offered by Indian Space Research Organization, New Space India Limited, or Antrix Corporation Limited.

The startups which are manufacturing satellites to launch will be exempted from the GST now when they choose for the Indian launch vehicle.

The declaration also demonstrated to be an encouragement to those Satellite making startups that were earlier obligatory to opt for foreign rockets for their preliminary satellite launch. Remarkably, earlier the launch services offered to foreign companies were paradoxically qualified as “export of service” which is exempted from the levy of GST rates. So it is now cheaper for an Indian-origin from or Start-up ventures to record their business in a foreign country and launch it using the ISRO^[1] rockets as a foreign customer.

In the year 2018, the Falcon 9 rocket of the company Space X, owned by Elon Musk took off its 1^st space flight, which carried seventy satellites from a total of sixteen countries including one from India called Exceed SAT 1, which turn out to be the first ever private satellite from India.

Benefits of this GST exemption

This GST exemption will further protect the domestic satellite industry utilize capabilities of homegrown launch without the upfront GST burden and give it a level playing field. However, they haven’t mentioned anything about private launch companies such as Sky root. If that is the situation (meaning if the specific relief is not extended to private launch companies), then it is against the equal opportunities,” said Skyroot’s CEO, Pawan Kumar Chandana. His firm builds rockets to launch commercial satellites into space.

It will directly facilitate the creation of a whole new system of satellite players in the Republic of India. Now, the base is at an equal level and the domestic satellite business will explode, encouraging the entire space of ecosystem,” added Srinath Ravichandran, one of the founders of Agnikul Cosmos, small rocket maker which put together a small vehicle to launch satellites.

Future after the GST exemption on satellite launches services

The latest declaration overlay way for future launches in the domestic launch pad from here and offers us playing field at an equal level. Nevertheless, India requires getting government based on merit via grants and seed funding, as is the case in Finland and Japan.

So far, only one Indian private company – Satellize, has their satellites initiated into orbit. While their primary launch was on board of SpaceX rocket, their second was by the way of ISRO and they also have two launches due this year. The global launch costs (per Kg of payload) have diminished and ISRO’s cost was very high in comparison, but now this GST exemption will help to gain ISRO their global position.

Conclusion

Read our article:A Sigh Of Relief For MSMEs: GST Exemption Limit Increased By The Council