GST on Electronics & Electrical Items

Service tax, excise duty, and VAT (Value-added Tax) were replaced by the Goods and Services Tax (GST), which went into effect in 2017 and covered all products and services. Based on the HSN (Harmonised System of Nomenclature) code system, the GST Council in India determines the GST rate. The GST on electronics ranges from 0% or 5% to a maximum of 28%. 

 

There are many different types of electronic goods, including mobile phones, laptops, air conditioners, televisions, etc. GST on electronic items is determined by the utilisation of the item.

Formerly, the government assessed a municipal tax between 25 and 26%, combined with an 11 to 12.5% VAT, 12.5% excise fee, and 1% CST (Central Sales Tax).

 

However, under the new tax system, GST on electrical products has several categories that are listed below.  

 

Electrical & Electronics Items Taxed at 5% GST

Renewable energy devices that are listed below fall under this GST rate. 

• Biogas plant

• Solar power-based devices

• Solar energy generation system

• Wind turbines and wind-powered generators

• Waste-to-energy plants and devices

• Solar lanterns/lamps

• Energy devices/plants based on ocean/tidal waves

 

Electrical & Electronics Items Taxed at 12% GST

As per the new GST tax regime, mobile phones (new and old) are subject to a 12% GST tax rate. You can learn more about the GST rate on mobile phones and accessories in our detailed article GST on mobile phones.

 

Electrical & Electronics Items Taxed at 18% GST

Transmission, distribution, and associated products are taxed at a rate of 18%. Below is the list of products. 

• Electricity capacitors

• Electrical resistors 

• Printed circuits

• Microphones and stands

• Generators and electric vehicles (excluding generating sets)

• Electric power plants and rotary compressors

• Electromagnets such as permanent magnets and products meant to be magnetised to become permanent magnets, clamps or similar holding devices, electromagnetic or permanent magnet chucks, electromagnetic couplings, clutches & brakes, and electromagnetic lifting heads. 

• Electric burners and ovens for industrial or laboratory use

• Additional industrial or laboratory instruments for induction or dielectric loss thermal processing of substances

• Electrically heated gas, photo beam, ultrasonic, laser, electron beam, magnetic plasma arc riveting, brazing, or welding equipment for metal or ceramic hot jetting.

• Telephone sets with communication devices other than transmitting or reception devices for use in wired or wireless networks (such as local or wide area networks).

• Discs, solid-state nonvolatile storage devices, cassettes, and other media for recording sound or other phenomena, including masters and matrices for disc creation.

• Electrical devices like fuses, voltage limiters, switches, lightning arresters, plugs & other connectors, surge suppressors, junction boxes for switching or protecting electrical circuits or for connecting to or in electrical circuits for a voltage above 1,000 volts.

• Mercury arc rectifier valves and tubes, vacuum or gas-filled valves and tubes, cathode-ray tubes, cold cathode, or photocathode valves and tubes.

• Photosensitive semiconductor devices such as photovoltaic cells mounted piezoelectric crystal circuits, transistors, led, diodes, and similar semiconductor devices.

• Any type of electrical insulator

• Primary cell, electric accumulator waste, scrap spent primary cells, spent primary batteries, spent electric accumulators, and electrical elements of equipment. 

 

Electrical & Electronics Items Taxed at 28% GST

Premium/luxury electronics are eligible for a 28% GST tax rate. Here is the list of products that you can refer to understand. 

• Inductors and static converters

• Primary batteries and primary cells

• Electric accumulators 

• Vacuum cleaner

Electromechanical household equipment with a self-contained electric motor

• Shavers, hair clippers, and other hair removal tools with an independent electric motor

• Internal combustion engines with spark-ignition or compression-ignition (ignition magnetos, magneto-dynamos, spark plugs, ignition coils, glow plugs, starter motors), generators with electrical ignition ( alternators and dynamos), and cut-outs of the appropriate kind that are used with such engines.

• Electrical lighting or signalling equipment such as defrosters & demisters and windscreen wipers that are used on motor vehicles. 

• Dry batteries, accumulators, and magnetos

• Electrothermic hairdressing tools (hairdryers, hair curlers, curling tong heaters), instantaneous and immersion electric heaters, hand dryers, electric smoothing irons, electric space and soil warmers, various electro-thermic household equipment, and electric heating resistors.

• Sets of electric sound amplifiers, individual loudspeakers, and audio-frequency electric amplifiers

• Types of equipment for recording or reproducing sound

• Devices for capturing or reproducing video

• Transmission equipment for radio/television, television cameras, digital cameras, and recorders for video cameras

• Radar equipment, radio navigational assistance equipment, and radio remote control equipment

• Transceiver equipment for radio transmitting

• Monitors, projectors, and television transmission instrumentation

• Electrical communication, security, traffic monitoring devices for railways, tram lines, roadways, inland waterways, parking lots, port facilities, and runways

• Signalling devices that use sound or light (bells, sirens, indicator panels, burglar or fire alarms)

• Electrical devices for regulating or safeguarding electrical wiring or for connecting to or in electrical circuits (switches, fuses, relays, surge suppressors, sockets, plugs, lamp holders, and other connectors, junction boxes) for a voltage not surpassing 1,000 wattages.

• Boards, consoles, panels, desks, cabinets, and other bases for electric control or distribution of power instruments.

• Electric arc lamps, ultraviolet or infrared lamps, shielded beam lamp systems, and filament or discharge lights

• Insulated cables and wires

• Electrical conduit types of equipment and joints made of base metal and lined with insulation

• Insulating adapters for electrical machines, appliances, or types of equipment that are constructed completely of insulating material, except any minor metal components (such as threaded sockets) 

The new GST rate on electronics has greatly impacted the electronics sector. Here’s a closer look at the several changes that will allow you to understand it better. 

• According to the GST rate on new electronic items, domestic goods are still regarded as luxury goods even if they make up a sizable portion of what users of electrical goods buy. This has prevented several companies from offering GST advantages to the final consumers of products.

• The increase in taxes and inflation would raise the cost of home goods, which the experts predict will have an impact on electronic marketplaces.

• According to analysts, the use of electrical equipment and machinery for business purposes is also anticipated to stay consistent.

• The GST on electronic goods has been reduced, and import duties on semi-finished goods have been waived, with the support of the electronics sector.

• The new Goods and Services Tax regime has increased competition. Due to the present high GST rate, Indian manufacturers would certainly have to compete with imports of inexpensive electronic components. 

The new GST for electrical items has been implemented to eliminate several tax forms such as VAT, service tax, etc. It has been introduced to bring more transparency to the tax system as well as to make the tax paying system an easier process for consumers. 

 

However, every new change is associated with both positive and negative points. And this new tax slab also has both factors.