Businesses dealing in tyres must ensure compliance with GST rules to avoid penalties. They must also be aware of the applicable rates as determined by the GST council. The uniformity brought by GST helps businesses in better tax management and enhances the overall ease of doing business. The GST rates on tyres are an essential consideration for both manufacturers and consumers, impacting pricing and demand within the market.
What is the applicability of GST on tyres?
The Goods and Services Tax (GST) on tyres is applicable under the unified tax regime introduced by the Indian government. Tyres, being essential components of vehicles, are categorised under specific HSN codes and are subject to varying GST rates depending on their type and usage. The GST council determines these rates, ensuring uniformity across the nation. For most tyres, the GST rates are set to maintain consistency in tax implications across the automotive industry. Whether it’s a commercial vehicle, passenger vehicle, or even a bicycle, tyres are taxed under GST rules that streamline the indirect taxation system.
What is the impact of GST on tyres?
| Aspect | Before GST | After GST |
| Tax structure | Multiple taxes (VAT, CST) | Unified GST regime |
| GST rates | Varies by state | Uniform rate across India |
| Pricing | Complex and varied | Simplified, uniform pricing |
| Compliance | State-wise complexity | Single registration under GST |
| Input tax credit | Limited availability | Full input tax credit under GST |
| Impact on SMEs | Burdensome | Simplified and beneficial |
The introduction of GST on tyres has had a profound impact on the industry. The uniform GST rates replaced the complex system of VAT and CST, leading to more straightforward pricing and tax calculations. Compliance became more accessible with a single registration under GST, which is particularly beneficial for small and medium enterprises (SMEs). The availability of full input tax credit under GST also significantly reduced the overall tax burden, leading to more competitive pricing in the market.
GST rate and HSN code for tyres
| Tyre Type | HSN Code | GST Rate |
| Car Tyres | 4011.10 | 28% |
| Motorcycle/Scooter Tyres | 4011.40 | 28% |
| Bicycle Tyres | 4011.50 | 12% |
| Bus and Truck Tyres | 4011.20 | 28% |
| Agricultural Vehicle Tyres | 4011.61 | 12% |
| Aircraft Tyres | 4011.90 | 18% |
The GST council has assigned specific HSN codes to various types of tyres to ensure uniformity in the classification and taxation of these products. The GST rates for tyres vary depending on their type, with most vehicle tyres falling under the 28% GST slab. However, essential categories like agricultural and bicycle tyres have a lower GST rate of 12%, which aligns with the government’s focus on supporting essential goods.
How to calculate GST on tyres?
- Determine the GST rate: Identify the applicable GST rate for the specific tyre type based on its HSN code.
- Calculate the GST amount: Use a GST calculator to apply the GST rate to the base price of the tyre.
- Add the GST to the base price: The GST amount is added to the tyre's base price to get the final selling price.
- Consider input tax credit: If applicable, businesses can claim input tax credit, which can reduce the GST payable.
Using a GST calculator simplifies this process, ensuring accurate compliance with GST rules. For businesses, understanding how to calculate GST on tyres is crucial for pricing and invoicing, ensuring they remain compliant with GST regulations.
Conclusion
The GST regime has significantly streamlined the tax structure for tyres in India, offering uniform rates and simplifying compliance for businesses. Understanding the applicability of GST, the impact it has had on the tyre industry, and how to calculate it is vital for businesses involved in tyre manufacturing or sales.
Explore the Bajaj Finserv Business LoanHere are some of the key advantages of a business loan from Bajaj Finance that make it an ideal choice for your business expenses:
- Rapid disbursement: Funds can be received in as little as 48 hours of approval, allowing businesses to respond promptly to opportunities and needs.
- Simplified application process: Online applications streamline the process, reducing paperwork and saving time.
- Competitive interest rates: The interest rates for our business loans range from 14% to 30% per annum.
- Flexible repayment schedules: Repayment terms can be tailored to align with the business's cash flow, helping manage finances without strain. You can choose a tenure ranging from 12 months to 96 months.
