Air conditioners (ACs) have witnessed a significant change in their GST rates recently. Previously taxed at 28%, the GST rate on various types of ACs has been reduced to 18%, effective from September 22, 2025. This change is expected to make cooling appliances more affordable amid rising demand across India.
- Old GST rate: 28% on most AC types
- New GST rate: 18% on most AC types (effective Sep 22, 2025)
Explore more on the GST rate and understand overall GST. Also, check your business loan eligibility to support your purchase plans.
Types of ACs with GST rates
| Item/Service | Old GST rate (Before Sep 22, 2025) | New GST rate (Effective from Sep 22, 2025) |
|---|---|---|
| Window AC | 28% | 18% |
| Split AC | 28% | 18% |
| Central AC | 28% | 18% |
| Portable AC | 28% | 18% |
| AC installation services | 18% | 18% |
| AC repair services | 18% | 18% |
How to calculate GST on air conditioner
The GST calculation on air conditioners involves applying the applicable GST rate on the transaction value, which is the price after any discounts. The GST calculator can help simplify this process for buyers and sellers.
Check out the GST calculator to estimate your GST on air conditioners easily. Meanwhile, you can also check your pre-approved business loan offer to streamline your purchase process.
Old and new prices of AC after GST reform
| Type of AC | Approximate price (with old 28% GST) | Approximate price (with new 18% GST) | Approximate savings |
|---|---|---|---|
| 1 Ton 3-Star Split AC | Rs. 35,000 - Rs. 40,000 | Rs. 32,000 - Rs. 36,000 | Rs. 3,000 - Rs. 4,000 |
| 1.5 Ton 5-Star Split AC | Rs. 45,000 - Rs. 55,000 | Rs. 41,000 - Rs. 50,000 | Rs. 4,000 - Rs. 5,000 |
| 1 Ton 3-Star Window AC | Rs. 28,000 - Rs. 32,000 | Rs. 25,500 - Rs. 29,000 | Rs. 2,500 - Rs. 3,000 |
| 1.5 Ton 5-Star Window AC | Rs. 38,000 - Rs. 45,000 | Rs. 34,500 - Rs. 41,000 | Rs. 3,500 - Rs. 4,000 |
Changes in air conditioner prices after GST reform
| Particulars | Pre-GST price (old data) | Post-GST price (new data) |
|---|---|---|
| Cost of manufacturing | Rs. 60,000 | Rs. 60,000 |
| Excise duty at 12.5% | Rs. 7,500 | NA |
| Cost of production | Rs. 67,500 | Rs. 60,000 |
| Transportation and other costs | Rs. 5,000 | Rs. 5,000 |
| Value addition | Rs. 5,000 | Rs. 5,000 |
| GST at 18% | Rs. 10,850* | Rs. 12,600 |
| Cost of the product | Rs. 88,350 | Rs. 82,600 |
Applicability of HSN code on air conditioners under GST
HSN codes are essential for proper classification and GST compliance on air conditioners. Each AC type and associated service corresponds to a specific HSN code, ensuring smooth tax processing and reporting.
Explore detailed HSN code information for air conditioners.
Input Tax Credit (ITC) availability and reversal for air conditioners
Under GST, eligible businesses can claim Input Tax Credit (ITC) on the GST paid for purchasing air conditioners. However, certain rules apply regarding ITC availability and reversal, especially if the AC is used partly for exempt supplies.
Learn more about Input Tax Credit related to air conditioners.
Conclusion
The reduction in GST rates on air conditioners has made these essential appliances more affordable for consumers and businesses alike. Understanding the GST rates, HSN codes, and ITC implications helps ensure compliance and cost efficiency. If you're planning to upgrade your business infrastructure, consider exploring funding options such as a small business loan to manage your purchase effectively.
