GST on Air Conditioners: AC HSN Code and GST Rate



India's Goods and Services Tax (GST) regime has significantly transformed the country's indirect tax structure, unifying various taxes under a single system. One of the many product categories affected by GST is consumer electronics, including air conditioners (ACs). With rising demand for air conditioners due to increasing temperatures and improved living standards, it is crucial for consumers and businesses alike to understand how GST impacts the pricing of these appliances. In this article, we will explore everything you need to know about GST on AC, including the applicable GST rate, HSN code, input tax credit implications, and more.

Understanding GST on AC

What is GST?

GST is a unified indirect tax levied on the supply of goods and services in India. It replaces multiple state and central taxes such as VAT, excise duty, and service tax. GST is categorized into CGST (Central GST), SGST (State GST), and IGST (Integrated GST, for interstate transactions).

GST on Air Conditioners (ACs)

Air conditioners fall under the category of luxury or high-end appliances and hence attract a higher GST rate. Under the GST regime, ACs are taxed at 28%, which is the highest slab among GST rates. This rate is applicable regardless of the brand, size, or type of AC—whether window, split, or inverter-based.

HSN Code for Air Conditioners

What is an HSN Code?

HSN (Harmonized System of Nomenclature) code is an internationally accepted system developed by the World Customs Organization (WCO) to classify goods systematically. In India, the HSN code is used to identify goods under GST for tax computation.

AC HSN Code and Description

Under GST, air conditioners typically fall under HSN Code 8415. Here's a detailed breakdown:

  • HSN Code 8415: This covers air conditioning machines, comprising a motor-driven fan and elements for changing the temperature and humidity, including those machines in which the humidity cannot be separately regulated.

Some specific sub-classifications include:

  • 841510: Window or wall-type air conditioning systems.

  • 841520: Air conditioning machines for persons, vehicles, or similar spaces.

  • 841581: Incorporating a refrigerating unit and a valve for reversal of cooling/heat.

  • 841582: Other types of air conditioning machines.

Each of these is categorized under the same GST slab but might be relevant for business reporting and compliance purposes.

GST Rate on ACs

As of the current GST structure:

  • GST rate on air conditioners: 28%

  • This comprises:

    • CGST: 14%

    • SGST: 14% (for intra-state sales)

    • IGST: 28% (for inter-state sales)

The 28% GST rate applies not only to the AC unit itself but also to accessories and related parts such as remotes, stabilizers when sold with ACs, and installation charges if included in the invoice.

Impact of GST on AC Prices

Prior to GST, the total tax on ACs included:

  • Excise duty (12.5%)

  • VAT (12.5% to 15% depending on the state)

  • Entry tax/octroi in some regions

This could total up to 26-30%, depending on the state. With the unified GST at 28%, prices in some regions increased slightly, while in others, the impact was neutral.

However, for businesses, the availability of Input Tax Credit (ITC) under GST has made the system more efficient and transparent.

Input Tax Credit on Air Conditioners

For Business Purchases

Businesses purchasing ACs for commercial use can claim ITC on the GST paid, provided the AC is used in the course or furtherance of business. For example:

  • A retail shop installing ACs for customer comfort.

  • Offices purchasing ACs for workplace cooling.

The Input Tax Credit helps businesses reduce their effective tax liability. However, personal or residential use of ACs does not qualify for ITC.

Important Note:

If AC installation charges are separately billed and attract GST, ITC may be claimed on those charges as well if used for business purposes.

GST on AC Services and Maintenance

Apart from the purchase of air conditioners, services like installation, maintenance, and repair also attract GST.

  • Installation Charges: If bundled with AC purchase, taxed at 28%. If billed separately, usually taxed at 18%.

  • Maintenance & Repair: Generally attract 18% GST, under HSN Code 9987 (maintenance and repair services).

It’s important for service providers and consumers to differentiate between goods and services to apply the correct GST rate.

GST on Second-Hand or Refurbished ACs

Second-hand or refurbished air conditioners sold by registered dealers are also subject to GST. The applicable rate remains 28%, but the margin scheme can apply if the seller is not availing ITC on the purchase.

Margin Scheme:

Under this, GST is charged only on the margin (difference between sale price and purchase price) and not the full value. This benefits dealers and resellers of used appliances.

GST Compliance for AC Dealers

Billing Requirements

Dealers selling ACs must issue GST-compliant invoices, showing:

  • HSN code

  • Taxable value

  • CGST, SGST/IGST

  • Total invoice value

They must also file regular GST returns such as:

  • GSTR-1 (outward supplies)

  • GSTR-3B (summary return)

  • GSTR-9 (annual return)

E-Invoicing and E-Way Bill

  • For businesses with turnover above prescribed thresholds, e-invoicing and e-way bill generation is mandatory.

  • An e-way bill is required for AC transport where the value exceeds ₹50,000.

Online Purchase of ACs and GST

When purchasing air conditioners online from platforms like Amazon, Flipkart, or Croma, GST is generally included in the price shown to the customer. The invoice should clearly display the GST amount and HSN code.

For business buyers, ensuring the GSTIN is mentioned on the invoice is essential to claim input credit.

Conclusion

Understanding the GST on AC is essential for both consumers and businesses. While the 28% GST rate may seem steep, the unified tax system brings transparency and efficiency, especially for business buyers who can claim input tax credits. Whether you’re a dealer, service provider, or a consumer planning to purchase an air conditioner, being aware of the HSN code, GST rate, and compliance rules ensures you stay on the right side of the law and make informed financial decisions.

If you need assistance with GST registration, filing, or compliance, Online Legal India provides expert support and hassle-free services tailored to your business needs.

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