GST Rate on Air Conditioners (AC): Find HSN Code, Impact and ITC in India

Find how GST applies to air conditioners with HSN code, price impact, calculation, and ITC benefits.
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AC Service HSN Code: Everything You Need to Know
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3 min
30 August 2025

Navigating the pricing and taxation of air conditioners in India can feel complex, particularly with the role of the Goods and Services Tax (GST). For buyers, sellers, and business owners alike, knowing how GST influences the cost of air conditioners is essential for smart financial decisions. This guide explains the key aspects of GST on air conditioners, including applicable HSN codes, tax rates, calculation methods, its effect on final pricing, and the benefits of Input Tax Credit (ITC). By the end, you’ll gain a clear understanding of how GST impacts the air conditioner market in India, enabling you to plan purchases or manage business operations more effectively.

What is GST on air conditioners (AC)?

Under the current GST framework, air conditioners in India fall under the highest GST Rate slab. Both split and window AC units are taxed at the same rate.

  • Air conditioners are taxed at 28% under the GST system
  • The classification is the same for both split ACs and window ACs
  • ACs are considered luxury goods, placing them in the highest tax bracket
  • This high tax rate makes ACs costlier for end consumers
  • Businesses can claim Input Tax Credit (ITC) on GST paid for ACs purchased for commercial use

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Applicability of HSN code to air conditioners under GST

Harmonised System of Nomenclature (HSN) codes are internationally accepted classification systems used for goods and services under the GST framework. For air conditioners, the HSN code is 8415, which applies to both domestic and commercial units. This coding ensures uniformity in levying the 28% GST Rate on all types of ACs. With HSN codes, businesses and buyers can easily determine the correct tax category, making GST compliance simpler and more transparent.

HSN Codes

Product Description

GST Rate

Effective Date

8415

Air conditioners with a motor fan used for temperature regulation

28%

01/07/2017

841583

Does not include a refrigerating unit

28%

01/07/2017

84158310

Split AC (2 tonnes or more), without refrigerating unit

28%

01/07/2017

84158390

Other AC units not incorporating a refrigerating unit

28%

01/07/2017


Price of an air conditioner before and after GST

Before the implementation of the GST structure, air conditioners attracted multiple indirect taxes such as Value Added Tax, excise duty, and service tax, with rates varying from state to state. VAT ranged between 12.5% and 14.5%, excise duty was levied at 12.5%, and in some cases, additional cess was applicable. Together, this pushed the overall tax burden on ACs up to nearly 27%.

With GST, these multiple taxes were replaced by a single uniform rate of 28%. Although this increased the effective tax by about 1% to 5%, it simplified compliance, removed state-level variations, and brought uniform pricing for consumers across India.

The table below highlights the difference in pricing before and after GST:

Particulars

Before GST (₹)

After GST (₹)

Manufacturing Cost

60,000

60,000

Excise Duty (12.5%)

7,500

Not Applicable

Total Cost of Manufacturing

67,500

60,000

Transportation Charges

5,000

5,000

Additional Costs for Value Added

5,000

5,000

VAT (14%) / GST (28%)

10,850

19,600

Final Product Price

88,350

89,600


How to calculate GST on air conditioners

Calculating GST on air conditioners is simple and can be done using the GST Calculator. The formula is:

GST Amount = (Original Cost × GST Rate) ÷ 100
Total Price = Original Cost + GST Amount

For example, if you buy an air conditioner priced at ₹40,000 with an applicable GST rate of 28%, the calculation will be:

  • GST = (₹40,000 × 28) ÷ 100 = ₹11,200
  • Total Price = ₹40,000 + ₹11,200 = ₹51,200

So, the final price of the AC after including GST would be ₹51,200.

Discounts and promotional offers are applied on the base price of the product first, and then GST is calculated on the reduced amount. This ensures that buyers enjoy the full benefit of any discount while paying tax only on the effective price.

Impact of GST on air conditioner prices in India

The implementation of GST has influenced the pricing of air conditioners across the country. With the 28% GST rate, prices saw a slight increase compared to the earlier multi-tax system, which initially caused a dip in sales.

Over time, the market has adapted, and demand has shifted towards energy-efficient models that help consumers save on electricity costs. Imported air conditioners are also taxed at the same 28% GST rate, but they incur additional customs duties, making them more expensive than locally manufactured options.

Input Tax Credit (ITC) under GST for air conditioners

Businesses can claim Input Tax Credit (ITC) on air conditioners, making it a cost-saving advantage under the GST framework. Companies are eligible to avail ITC on AC purchases when these are used for business purposes.

For eligibility, the purchase must be treated as part of the company’s assets, and a valid GST invoice must be available. By claiming ITC, businesses can lower their GST liability, thereby reducing the effective cost of air conditioners procured for commercial use.

Conclusion

Understanding the HSN code and GST rate applicable to air conditioners is essential for businesses and consumers alike. While GST has slightly increased the overall cost of ACs, it has simplified compliance by replacing multiple indirect taxes with a single, uniform structure. With clear classification under HSN code 8415 and the benefit of claiming ITC for commercial use, businesses can better manage costs and ensure tax efficiency.

For HVAC companies, service providers, or traders dealing with air conditioners, access to timely financing is equally important. A business loan can provide the necessary funds to invest in equipment, expand services, and manage working capital needs, ensuring smooth operations while staying GST-compliant.

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Frequently asked questions

What is the HSN code of air conditioner and GST rate?
The HSN code for air conditioners is 8415, and the GST rate varies depending on factors such as the type and capacity of the air conditioner. Generally, the GST rate for air conditioners is 28%.
What is the HSN code for 1.5 ton split air conditioner?
The HSN code for a 1.5 ton split air conditioner is 8415, which falls under Chapter 84 of the HSN classification for machinery and mechanical appliances.
What is the GST rate for a 1.5-ton AC unit?

The GST rate for a 1.5-ton AC unit is 28%, as all air conditioners fall under the highest tax slab irrespective of their capacity.

What is the GST rate for air conditioner spares?

Air conditioner spare parts are generally taxed at 28% GST, though the exact rate depends on their specific HSN code classification.

Is GST applicable to imported air conditioners?

Yes, imported air conditioners attract 28% GST along with applicable customs duties, which further increases their price compared to domestic models.

Is GST applicable to both window and split ACs?

Yes, both window and split air conditioners are taxed at the same 28% GST rate under the current structure.

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