Under the GST system, goods and services are taxed, and air conditioners are placed in the highest GST bracket of 28%, reserved for luxury items. This rate applies to both the purchase and installation of air conditioners. When you buy an AC, installation is often included, making it a composite supply. This means the total cost, covering the air conditioner and its installation, is taxed at 28%. The GST on air conditioners covers the product and service for the home or office. While GST has reduced rates for many electronics, GST on air conditioners has increased by 1% to 5%. As luxury goods, air conditioners attract higher taxes, making them more expensive under the GST regime 2024. GST is an indirect tax that has replaced many other taxes in India, aiming to streamline the tax process. The GST rate for air conditioners is 28% as of 2024. This is considered the highest slab in the GST structure, primarily reserved for luxury goods and services. While air conditioners are essential for many, the high GST rate places them in the luxury category. This means that when you buy an AC, you pay 28% of the product price in taxes. Every product under GST is classified under a specific HSN (Harmonized System of Nomenclature) code. For air conditioners, the HSN code is 8415. This code helps identify the product and apply the correct GST rate. Here’s the revised table: GST applies to all air conditioners, whether window, split, or portable. This tax is imposed at the time of purchase, and businesses must charge it to consumers. The GST component is always part of the final price, whether you purchase an AC online or from a physical store. In India, air conditioners are seen as luxury goods, and the 28% GST slab applies uniformly to all types of ACs, regardless of their energy efficiency, size, or brand. Before the introduction of GST in 2017, the tax on air conditioners was composed of multiple taxes, including Value Added Tax (VAT), Central Excise Duty, and more. Depending on the state, these combined taxes could total around 25% to 26%. However, the rate jumped to 28% post-GST under the luxury goods slab. Though the tax structure became more simplified with the implementation of GST, it led to a slight increase in the overall tax burden for consumers. Luxury Item Classification: Air conditioners are considered luxury goods, falling under the highest GST bracket of 28%. Even though ACs are becoming more common, they are still not considered necessary in many parts of India. Limited Ownership: In 2024, only 11% of Indian households own an air conditioner, with most users coming from middle and upper-income groups. This makes ACs more accessible to wealthier sections of society. Energy and Revenue Concerns: The higher GST rate discourages high energy consumption and helps the government generate more revenue from luxury goods like air conditioners. Yes, GST is also applicable on imported air conditioners. When air conditioners are imported into India, they attract Customs Duty and GST at 28%. So, if you are importing an air conditioner, you will pay customs duty and the applicable GST, making the total cost much higher. For example, if an air conditioner costs ₹50,000, you may pay additional customs duty and 28% GST, significantly increasing the total cost. In 2024, the GST on air conditioners remains at 28%, placing them in the luxury goods category. Though this tax structure simplifies the earlier complex system of multiple taxes, it has slightly increased the overall cost of air conditioners. For consumers in India, understanding this tax is essential, especially if you are planning to purchase or import an air conditioner. While the tax might seem high, it is crucial to consider that it reflects the government's intent to regulate the consumption of luxury goods while generating revenue. Q1: Can I Claim GST on the Air Conditioner? Ans1 Yes, you can claim GST on an air conditioner if purchased for business use, such as for an office or commercial space, allowing you to avail of the Input Tax Credit (ITC) on the GST paid. This means the GST can be offset against your GST liability. However, no GST credit can be claimed if the air conditioner is for personal use. To be eligible, ensure the AC is for business purposes, and you have valid GST registration and invoices. Q2: How has GST impacted the prices of air conditioners? Ans2 GST has slightly increased the prices of air conditioners, raising the overall tax from 25-27% to 28%. This increase is due to air conditioners being categorized as luxury items, resulting in higher consumer costs under the GST regime. Q3: Is GST applicable for both window and split ACs?What is GST on Air Conditioners (AC)?
The HSN Code for Air Conditioners
Applicability of GST on Air Conditioners
GST on Air Conditioners (AC): Pre-GST vs Post-GST
Why is the GST rate on air conditioners expensive?
Is GST applicable to imported air conditioners?
Conclusion
FAQs for GST on the Air Conditioner