GST on Air Conditioners: AC HSN Code and GST Rate

gst on ac

Air conditioners have become an essential part of our lives, providing comfort and respite from the scorching heat. With the implementation of the Goods and Services Tax (GST) in India, it's important to understand the implications of this tax on air conditioners. In this article, we will explore the GST rate applicable to air conditioners, the HSN code associated with them, and the overall impact of GST on air conditioner prices

The implementation of GST in India revolutionized the tax system by bringing all indirect taxes under one umbrella. This simplified the tax structure and aimed to create a unified market across the country. Air conditioners, being a durable consumer product, also came under the purview of GST.

The prices change after GST on air conditioners

Year Pre-GST Price Range (INR) Post-GST Price Range (INR) Change
2016 25,000–40,000 23,000–38,000 -5% to -7%
2017 22,000–35,000 20,000–33,000 -5% to -7%
2018 20,000–33,000 18,000–30,000 -5% to -10%
2019 18,000–30,000 16,000–27,000 -5% to -10%
2020 16,000–27,000 14,000–24,000 -5% to -10%
2023 14,000–24,000 12,000 - 20,000 -5% to -10%

After the implementation of GST, the prices of air conditioners witnessed a slight decline. This can be attributed to the removal of cascading taxes and the introduction of a simplified tax structure. However, it's important to note that the prices may vary based on factors such as brand, model, energy efficiency, and additional features.

Applicability of GST on air conditioners in India

GST applies to the supply of air conditioners in India. Both manufacturers and sellers of air conditioners are required to register under GST and comply with the relevant provisions. This ensures that the tax is collected at each stage of the supply chain, from the manufacturer to the end consumer.

The value of supply to compute GST on air conditioners

The value of supply to compute GST on air conditioners includes the transaction value of the goods, any taxes, duties, cesses, and charges levied on the supply, and incidental expenses such as packing, commission, and any amount charged for anything done by the seller at the time of supply.

The GST rate and HSN code applicable to air conditioners 

Air Conditioner Type

HSN Code

GST Rate

Window AC

8415

28%

Split AC

8415

28%

Tower AC

8415

28%

Portable AC

8415

28%


The HSN (Harmonized System of Nomenclature) code for air conditioners is 8415. Regardless of the type of air conditioner, whether it's a window AC, split AC, tower AC, or portable AC, the HSN code remains the same. The applicable GST rate for air conditioners is 28%.

Availability of Input Tax Credit (ITC) on air conditioners and reversal

Under GST, manufacturers and sellers of air conditioners can avail of the Input Tax Credit (ITC) on the taxes paid on inputs used in the manufacturing or sale of air conditioners. This helps reduce the overall tax liability. However, certain conditions and restrictions apply, and ITC may not be available on specific inputs or situations.

It's important to note that if the air conditioner is used for both taxable and exempt supplies, the ITC needs to be reversed proportionately based on the percentage of exempt supplies.

Note about GST on the import of air conditioners

In the case of air conditioners imported into India, GST is applicable at the time of import. The importer is required to pay the applicable GST along with any customs duties and charges. This ensures that imported air conditioners are treated on par with domestically manufactured air conditioners in terms of tax liability.

Availability of GST exemptions in India

While GST applies to most goods and services, there are certain exemptions provided under the law. However, air conditioners do not fall under the category of exempted goods. Therefore, air conditioners attract the standard rate of GST, which is 28%.

Impact of GST on air conditioner prices

The implementation of GST has had a positive impact on air conditioner prices. The removal of cascading taxes and the streamlined tax structure have resulted in a reduction in prices. This has made air conditioners more affordable for consumers. Additionally, the availability of ITC has also contributed to cost savings for manufacturers and sellers, which further translates into competitive pricing.

Conclusion

The inception of GST has brought significant transformations to India's taxation system, including the taxation of air conditioners. With an 28% GST rate and the HSN code 8415, air conditioners have witnessed a positive shift in pricing, making them more accessible to consumers. At Taxlegit GST Consult, we recognize the favorable impact of GST implementation on the air conditioning industry.

The availability of Input Tax Credit has further supported manufacturers and sellers, resulting in cost savings and streamlined operations. As dedicated consultants, we are committed to assisting businesses in adapting to the GST framework, ensuring compliance, and capitalizing on the benefits it offers. Through our expert guidance, we aim to contribute to the growth and success of businesses in the air conditioning sector, and beyond, in this new era of taxation in India.

FAQs

Q1. Are air conditioners exempt from GST?

Ans1. No, air conditioners are not exempt from GST. They attract a standard GST rate of 28%.

Q2. What is the HSN code for air conditioners?

Ans2. The HSN code for air conditioners is 8415.

Q3. Can I avail Input Tax Credit on air conditioners?

Ans3. Yes, manufacturers and sellers can avail of Input Tax Credits on the taxes paid on inputs used in the manufacturing or sale of air conditioners.

Q4. How has GST affected air conditioner prices?

Ans4. GST has led to a reduction in air conditioner prices due to the removal of cascading taxes and the introduction of a streamlined tax structure.

Q5. Is GST applicable to imported air conditioners?

Ans5. Yes, GST applies to imported air conditioners. Importers are required to pay the applicable GST along with customs duties and charges.

 

Also Read