GST on Electronics and Electrical Items

As India moves towards a Digital India, the demand for electronic items has increased rapidly over the past decade. To regulate and ensure uniform taxation across the country, the Government of India introduced the Goods and Services Tax (GST) in 2017. GST is a single indirect tax levied on goods and services throughout India and aims to bring transparency to the tax system. GST's application spans across various sectors, including the automobile industry, as seen in the GST on cars, which has specific rates depending on the type of vehicle.

GST has replaced a myriad of indirect taxes and has important implications for businesses – whether you operate in the retail sector or are a manufacturer of electronic items. Understanding the implications of GST on electronics is important to make informed decisions that impact your business. Utilising a GST Calculator can help businesses accurately determine the tax liabilities on various products, ensuring compliance and better financial planning. Additionally, when starting a business, it is crucial to understand the documents required for GST registration to ensure that you are well-prepared for the registration process.

What is GST on Electronics and Electrical items?

The GST rate on electronics depends on the type of electronic item. Electronics generally fall into 5 tax slabs: 0%, 5%, 12%, 18%, and 28%. For example, mobile phones and refrigerators are taxed at 18% GST, while air conditioners and televisions larger than 32 inches are taxed at 28%, as they are considered luxury items. Knowing these rates and the relevant GST state code helps businesses and consumers understand the cost of buying and selling electronics.

GST on electronic items

GST is applicable on most electronic items at different rates, depending on the item’s classification. For example, mobile phones are subject to a GST rate of 18%, while for television, if the screen size is 32 inches or less, a GST of 18% is applied. However, for screen sizes exceeding 32 inches, the GST charged is 28%. Items such as cameras attract a 28% GST rate. The GST on electronic items also varies depending on the state in which the business operates. To ensure that you are applying the correct GST for your location, you should refer to the GST state code.

Businesses that deal with electronic items need to be aware of the GST rates that apply to the products they are selling, as well as any exemptions or deductions they may be eligible for. This is important to avoid any penalties or legal issues that may arise from incorrect tax reporting.

Electrical and electronics items taxed at 5% GST

Renewable energy devices listed below fall under this GST rate:

The lower GST rate on electric vehicles is intended to encourage environmentally friendly options.

• Solar power-based devices
• Biogas plants
• Wind turbines and wind-powered generators
• Solar energy generation systems
• Waste-to-energy plants and devices
• Energy devices/plants based on ocean/tidal waves
• Solar lanterns/lamps

Electrical and electronics items taxed at 12% GST

Under the new GST tax regime, both new and used mobile phones are subject to a 12% GST tax rate. For more information on the GST rate for mobile phones and accessories, refer to our detailed article on GST on mobile phones.

Electrical and electronics items taxed at 18% GST

The Goods and Services Tax (GST) levied by the Indian government varies according to the type of item or service. As per current rates, a multitude of electrical and electronic items fall under the 18% tax slab.

Here's a list of some electrical and electronics items that are currently taxed at 18% GST:

1. Electric accumulators, including separators
2. Electrical apparatus for line telephony or line telegraphy
3. Microphones, multimedia speakers, headphones, earphones
4. Electrical capacitors
5. Winding wires; coaxial cables; optical fiber
6. Electronic calculators
7. Electrical relays
8. Insulated/Ceramic Electrical conductors
9. Electric filament or discharge lamps
10. Electric instantaneous or storage water heaters
11. Electrical transformers, static converters, and inductors
12. Electronic integrated circuits and micro-assemblies
13. Oscilloscopes, spectrum analyzers, and other instruments and apparatus for measuring or checking electrical quantities.
14. Electrical machines with translation or dictionary functions.

Please note that this list isn't comprehensive and tax rates may be subject to change based on government revisions.

Electrical and electronics items taxed at 28% GST

As per the latest Goods and Services Tax (GST) guidelines, certain electrical and electronic items are placed under the 28% tax bracket. They include the following:

1. Air conditioners
2. Household washing machines (capacity of less than 10 kg)
3. Vacuum cleaners
4. Video recording or reproducing apparatus
5. Home theater systems and other audio and video equipment
6. Freezers and refrigerators
7. Shavers, hair clippers, and hair-removing appliances
8. Electric smoothing irons
9. Food grinders and mixers
10. Instantaneous gas water heaters
11. Electric hot plates
12. Microwave ovens
13. Electric coffee or tea makers
14. Electric cookers, cooking plates, and boiling rings
15. Television sets (up to 32 inches)
16. Projectors
17. Electrical ignition or starting equipment for internal combustion engines (e.g., ignition coil, starters, generator, alternator).
18. Electrical lighting/signaling equipment, windscreen wipers, defrosters, and demisters used for cycles or motor vehicles.

Keep in mind that GST rates in India are subject to changes based on decisions taken by the GST Council. 

Impact on business owners

Small business owners who deal with electronic items need to ensure that they comply with the GST regulations to avoid legal issues and ensure smooth business operations. They also need to be aware of the financial implications of GST on electronic items, including the pricing of goods and services.

For example, small business owners who sell electronic items may need to increase their prices to account for the GST that is applied on the items they are selling. This can impact the competitiveness of their products and services, and may require them to find alternative income sources or financing options.

Furthermore, small business owners may face challenges in claiming input tax credits for GST paid on items such as office equipment and supplies. It is important for business owners to keep detailed records of their expenses such as GST paid to suppliers so that they can claim the input tax credit when filing their tax returns.

Business financing

Small business owners may require financing solutions such as business loans to finance their operations, including the purchase of electronic items. This is especially true in cases where there is a need to meet sudden demand or when businesses need to upgrade their equipment or diversify their product range. If you are planning to register your business for GST, understanding the GST registration process is crucial to ensure a smooth and compliant start.

Bajaj Finance offers high-value business loans of up to Rs. 80 lakh that can help business owners finance their operations and increase their competitive advantage by enabling them to purchase the latest electronic items or increase their inventory. Here are some of the advantages of opting for a Bajaj Finserv Business Loan:

1. Flexi Loan feature: Lower your EMIs, withdraw funds as necessary, and conveniently prepay with our Flexi Loan options.
2. No collateral: Obtain a loan without having to pledge any assets as collateral.
3. Flexible repayment tenure: Enjoy enhanced flexibility in repaying your loan, with tenure options ranging from 1 year to 8 years.
4. High loan amount: Secure substantial funds, up to Rs. 80 lakh, to fulfill your business needs.

GST has important implications for businesses that operate in the electronic items sector. Business owners need to be aware of the various GST rates that apply to electronic items, as well as exemptions and deductions that they may be eligible for. By understanding the implications of GST on electronic items, businesses can make informed decisions that impact their bottom line. Additionally, business financing solutions such as business loans can enable businesses to finance their operations and increase their competitiveness in a rapidly changing economic landscape.