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Key Highlights
- The HSN code for common household and business fans is 8414.
- Ceiling, table and wall fans are subjected to 18% GST as they are classified as consumer goods.
- There are no tax exemptions for any type of fans under GST.
Fans are essential household and business appliances that are installed for ventilation and cooling. Under India's goods and services tax (GST) regime, fans and other electrical appliances are categorised under certain harmonised system of nomenclature (HSN) codes.Understanding the GST rates and fan's HSN code s is essential for compliance and cost estimations if you are a manufacturer or trader or a consumer of ceiling fans, wall fans, table fans, or other electric fans.
Fans HSN Code and GST Rate
All types of goods and services are categorised under specified HSN codes under the GST. These codes are essential identifiers for each product and help in the application of the right taxes. Let us explore the multiple fans HSN code and the subsequent GST rates:
1. Fans HSN Code
The electric fan HSN Code is 8414, and it includes exhaust fans, pedestal fans, table fans, and ceiling fans. All electric fans, whether used for domestic or business purposes, are subject to this code.
2. GST Rate of Fans
All electric fans with HSN code 8414 are subject to an 18% GST charge. It applies to:
- Ceiling fans
- Fans installed on walls
- Table fans
- Pedestal fans
- Exhaust fans for exhaust
- Industrial fans
3. GST Breakdown on Fans HSN Code 8414
The 18% GST is split into:
- The Central Goods and Services Tax (CGST) is 9%.
- The State Goods and Services Tax (SGST) for intrastate sales is 9%.
- For interstate sales, the Integrated Goods and Services Tax (IGST) is 18%.
Let us understand the breakdown with an example. The GST computation for a ceiling fan sold for ₹2,000 would be: CGST: 180 (₹2,000 x 18%) SGST: 180 (₹2,000 x 18%) GST total: ₹360 (CGST + SGST) Total Cost (GST included): ₹2,360
4. Why are fans subject to an 18% GST rate?
Fans are classified as consumer electrical appliances, and most consumer-based electrical goods are subject to an 18% GST tax. This rate ensures consistency in taxes between states and is standard for the majority of household electrical items.
Fans HSN Code: Input Tax Credit (ITC) Benefit
A registered organisation can claim the input tax credit (ITC) on the GST paid if it purchases fans for manufacture, resale, or commercial use.
Who Is Eligible for ITC?
- Any wholesaler and retailer dealing in fans are eligible to get an ITC on the GST they have paid for their inventory.
- ITC is available to manufacturers for the raw materials required to make fans.
- Companies can also claim ITC if they buy fans for industrial or office use.
In order to claim ITC for fans HSN code 8414:
- The supplier has to be a registered GST dealer in order to claim ITC.
- A current GST invoice is required of the customer.
- The GST return (GSTR-2B) must show the amount of GST paid.
GST's Effect on Prices with Fans HSN Code 8414
Prior to the introduction of the GST, fans were subjected to state-specific municipal taxes, excise taxes, and VAT (value-added tax). Now, after the implementation of GST, taxes on fans HSN code beginning with 8414:
- Standardised Taxation: A unified 18% GST rate across states.
- Impact on Price: The 18% GST rate is higher than the previous combined tax rate in several states, initially causing a modest increase in fan pricing. However, streamlined tax compliance and ITC benefits balance expenses.
- Business Ease: The tax system for manufacturers and dealers has been streamlined, removing the necessity for several state-by-state tax computations.
GST Adherence for Manufacturers and Fan Sellers
Companies dealing in fans HSN code starting with 8414 are required to follow these guidelines for GST compliance:
- Registration for GST: If yearly turnover turnover (for commodities) is above ₹40 lakh, it must be GST registered.
The threshold is 20 lakh for companies operating in states that fall under specific categories. - Invoicing for GST: A GST-compliant invoice that includes the relevant GST rate (18%) and the HSN number (8414) must be included with every sale.
- Filing GST Returns: Companies are required to submit GSTR-1 (outward supplies) and GSTR-3B (summary report) on a monthly or quarterly basis. Businesses having a turnover of more than ₹2 crore must additionally file an annual return (GSTR-9).
Importance of Understanding Fans HSN Code and GST Compliance
Understanding fan's HSN code allows businesses and customers to make informed decisions. Fans, such as wall, ceiling, and table fans, are subject to an 18% GST charge and are classified under HSN Code 8414. Businesses must maintain compliance by registering under GST, creating accurate invoices, and timely filing returns, even though GST has standardised tax rates throughout India. You can use the online GST calculator on Aditya Birla Capital 's official website to generate precise estimates in minutes. For businesses, claiming input tax credit (ITC) on fan purchases can significantly reduce costs. Consumers should also be aware of GST to properly understand product pricing.
FAQS - FREQUENTLY ASKED QUESTIONS
What is the GST rate applicable to men's shirts?
The GST rate on men's shirts, whether knitted or crocheted, varies from 5% to 12%, depending on the product's value. Generally, garments with a taxable value of up to ₹1,000 per piece attract 5% GST, while those priced above ₹1,000 per piece attract 12% GST per the revised rates.
What is the HSN code for men’s shirts?
The HSN code for men's shirts varies based on whether the fabric is knitted or not. For knitted or crocheted shirts, the HSN code is 61, while for non-knitted shirts, the HSN code is 62. These codes help in identifying the product category for taxation and compliance purposes.
How does GST affect manufacturers and retailers of men's shirts?
Manufacturers and retailers must charge GST based on the price of the shirts they sell. They can claim an input tax credit (ITC) on the GST paid for raw materials like fabric and accessories. Compliance with GST rules ensures proper tax filing and helps avoid penalties for non-compliance.
Are second-hand or used men's shirts taxed under GST?
Yes, worn or second-hand clothing, including men's shirts, falls under HSN code 6309 or 6310 and is taxed at 5% GST. However, tax may not be applicable if sold by unregistered individuals or small businesses below the GST threshold.
What GST rules apply to businesses exporting men’s shirts?
Exports of men’s shirts are classified as zero-rated supplies under GST. That means exporters do not have to charge GST to international buyers. However, they can claim a refund on the GST paid for raw materials and input costs used in manufacturing the shirts.
How is GST calculated on men’s shirts?
GST on men's shirts is calculated based on the final selling price. For example, if a shirt is priced at ₹900, the GST applicable at 5% will be ₹45, making the total price ₹945. If a shirt costs ₹1,200, the GST at 12% will be ₹144, making the total price ₹1,344.
Are discounts considered when applying GST on men’s shirts?
If a discount is applied before billing, GST is calculated on the discounted price. For example, if a shirt originally priced at ₹1,200 is sold at ₹950 after a discount, it attracts 5% GST instead of 12%. However, post-sale discounts do not reduce GST liability.
Are linen or silk men’s shirts taxed differently?
No, linen and silk men’s shirts follow the same GST rate structure based on price. However, raw silk and raw jute are exempt from GST, whereas silk yarn and fabrics attract a 5% GST rate before being used to manufacture shirts.
Can businesses selling men’s shirts opt for the GST composition scheme?
Yes, if you sell men’s shirts, you can opt for the GST composition scheme if your annual turnover is below ₹1.5 crore (₹75 lakhs in northeastern states). Under this scheme, you pay a lower fixed GST rate, but cannot charge GST separately on invoices.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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