The Goods and Services Tax (GST) is a single tax that applies to the supply of goods and services from the manufacturer to the final consumer. It aims to decrease manufacturing costs and create a more uniform and simplified economy where goods and services are more evenly priced. Don't be concerned if you're thinking about purchasing a refrigerator or any electronics for your home but aren't sure if you'll have to pay GST on electronic items. After reading this article, you will better understand the GST rate on refrigerators and the impact of GST on electronic goods.
What are the various GST rates?
According to the products, the Goods and Services Tax (GST) is divided into five separate rates: 0%, 5%, 12%, 18%, and 28%. The GST rate on electrical goods, such as consumer electronics and electrical machinery, is discussed in this article.
Let's look at which electrical goods fall under which tax bracket:
GST Rate at 5%:
- Vehicles that run on electricity, such as two- and three-wheeled electric vehicles
- Biogas plant
- Wind turbines
- System for generating solar energy
- Aircraft engines
- Hand pumps and parts thereof
- Other than farm-type machinery and parts, machinery used in the milling sector or for the processing of cereals or dried leguminous vegetables
GST Rate at 12%:
- Mobile Phone
- Sewing Machine
- Bicycle Pumps
- Milking machines and dairy machinery
- Apparatus for medical, surgical, dental, or veterinary purposes that uses X-rays or alpha, beta, or gamma radiations, such as radiography or radiotherapy
- Fuel Cell Motor Vehicles
- Walkie talkie
GST Rate at 18%:
- Computer monitors with a maximum size of 32 inches and a television set-top box
- Tricycles, scooters, pedal cars, and other electronic toys
- Electrical Transformer
- Water Pumps
- Video game consoles and machines
- Weighing Machine
- Vacuum Cleaner
- Other than sporting products, equipment for general physical activity, gymnastics, athletics, swimming pools, and padded pools
- Washing Machine
- Water Heater
- Wind Musical Instruments
- Electronic integrated circuits
- Gas, liquid or electricity supply or production meters
- Cigarette lighters and other lighters, whether mechanical or electrical
- Hydraulics and their components for tractors
- Insulating fittings for electrical devices, appliances, or equipment, consisting entirely of insulating material with little metal components.
- All machinery, including prime movers, instruments, apparatus, and appliances, control gear and transmission equipment, and auxiliary equipment, that are required for the initial setup of a unit or the substantial expansion of an existing unit of a specified industrial plant, irrigation project, power project, or mining project.
- Parts such as musical box mechanics and accessories such as cards, discs, and rolls for mechanical musical instruments; metronomes, tuning forks, and pitch pipes of various types
- Static Converters (UPS)
- Lamps and lighting fixtures, including searchlights and spotlights, illuminated signs, illuminated nameplates, and the like, with a permanently fixed light source, and parts thereof, other than kerosene pressure lanterns and parts thereof, including gas mantles; hurricane lanterns, kerosene lamp, petromax, glass chimney, and parts thereof; LED lights or fixtures, including LED lamps (Metal Core Printed Circuit Board)
GST Rate at 28%:
- Chassis fitted with engines, for the motor vehicles
- Dish Washer Machine
- Monitors and projectors that do not include a television reception system
- CCTV, digital cameras and video camera recorders
- Air Conditioner
- Pumps for dispensing gasoline or lubricants, such as those seen in gas stations and garages
- Internal combustion piston engines with compression ignition
- Spark-ignition or compression-ignition combustion engines that require electricity to start or other equipment to start
GST impact on Electronics
Electric and electronic equipment has been subjected to GST based on their purpose and field of application. While most electronics are taxed at 18%, others, such as dishwashing machines, digital cameras, and air conditioners, are taxed at 28% GST on home appliances, indicating that the government's philosophy is to tax luxury items at a higher rate.
The GST rate on refrigerators and washing machines is set at 18%, which is still high considering that every household owns basic electronic appliances. As a result, manufacturers such as Samsung, Godrej, and LG may have no choice but to raise their prices, burdening end-users.
Benefits of GST on electronic items
GST has benefited farm equipment, solar and wind-related apparatus, but it has had little effect on industrial equipment. Domestic appliances saw a 2 to 3% increase in price as the maximum slab of 28% was applied. These items appear to be regarded by the government as a luxury items. With this GST slab, the cost of domestic appliances rises marginally.
Consumer electronics- brown goods and consumer appliances and white goods are the two primary consumer durables categories. The former consist of light electronic appliances such as computers, television etc., whereas the latter include air conditioners (ACs), refrigerators, washing machines, sewing machines, electric fans, and other household items.
- In the fiscal year 2020, India's refrigerator output was more than 12 million units. Refrigerators accounted for 27% of the consumer appliance industry.
- In India, the Air Conditioner Market is expected to increase at a compound annual growth rate (CAGR) of 10.7% from 2021 to 2027.
- In 2019, the Washing Machine Market in India was valued at over 100 billion Indian rupees with a CAGR of around 3.7% and was expected to increase in the following years significantly.
According to an indirect taxes specialist from the Confederation of Indian Industry (CII), GST as a whole has permitted seamless Input Tax credit, and overall, items have become 3-4% cheaper in general. The expert claims that if interest rates fall below 28%, the products will become even more affordable.
The Goods and Services Tax (GST) has transformed the economy; it is a game-changing reform for the Indian economy because it establishes an appropriate net price for goods and services subject to a single taxation system. However, GST on electronic items at 18% and 28% has created pressure on consumers. By considering common household appliances such as air conditioners, washing machines, and refrigerators as luxurious items, this rate impacts consumer purchase. On the contrary, GST has also aided in ensuring uniformity of indirect tax rates across the country. To learn more about GST and its impact, download Khatabook.