Chapter 84 - GST Rates and HSN Codes for Refrigerators

• GST on refrigerators is 28% for household use and 18% for commercial refrigeration units.
• HSN code 8418 applies to all types of refrigerators, with subcategories for specific models.
• Businesses can claim ITC on refrigerators used for commercial purposes, but personal use does not qualify.
• Commercial refrigerators used in businesses like hotels and retail stores attract lower GST (18%), reducing the tax burden.
• Exports of refrigerators are zero-rated under GST, allowing businesses to claim refunds on input tax.

Refrigerators are essential appliances for both households and businesses, ensuring proper food preservation and storage. In India, like other consumer goods, refrigerators are subject to Goods and Services Tax (GST), which directly impacts their pricing and affordability.For businesses dealing in refrigerators, GST compliance is crucial, requiring the correct Harmonized System of Nomenclature (HSN) code for accurate tax filing and invoicing. Additionally, understanding Input Tax Credit (ITC) eligibility can help businesses optimise their tax liabilities.In this blog, we’ll break down GST rates and HSN codes for refrigerators, discussing their impact on pricing, compliance, and taxation benefits for both consumers and businesses.

Refrigerators are classified under the 28% GST slab for most household models. However, certain refrigeration equipment, especially for commercial and industrial use, falls under the 18% GST category. Below is a breakdown of applicable GST rates based on product specifications:

Please Note

• Revised GST Rate: As of 27 July 2018, the GST on refrigerators and freezers was reduced from 28% to 18% to make them more affordable.
• Uniform Taxation: All refrigeration units, whether for household or commercial use, now fall under the 18% GST category.
• HSN Code Classification: The 8418 series of HSN codes cover refrigerators, freezers, and refrigeration equipment, with subcategories based on design and purpose.
• No CESS Applied: Unlike some other luxury goods, refrigerators and freezers do not attract any additional cess beyond the standard GST rate.
• Commercial Equipment Benefit: Even before the rate revision, commercial refrigeration equipment was already taxed at 18%, making the new revision more significant for household buyers.

Household refrigerators fall under the category of consumer durables, which the Indian government classifies as luxury goods rather than essential commodities.This classification is based on the principle that these products, though widely used, are not deemed necessary for survival, and are typically purchased by middle-to-upper-income groups. As a result, they attract a higher 28% GST slab, similar to other home appliances, such as air conditioners, washing machines, and televisions.The rationale behind this high tax rate is to generate higher revenue for the government, as consumer durables contribute significantly to GST collections. Additionally, luxury taxation is often imposed on goods that are considered non-essential to maintain a balance between affordability and tax revenue generation.

Unlike household refrigerators, refrigeration units used in business and industrial settings—such as deep freezers, refrigerated display cabinets, and industrial cooling systems—serve commercial purposes. These are integral to various industries, including food storage, healthcare, pharmaceuticals, and retail.Since these refrigeration systems are essential for business operations and public welfare , they are taxed at a lower 18% GST rate. The lower tax helps businesses manage costs effectively while ensuring the availability of necessary cold storage solutions for perishable goods, medicines, and essential supplies.Moreover, lower taxation on commercial refrigeration equipment supports economic growth, especially in industries that rely heavily on temperature-sensitive storage, such as the cold chain logistics sector, supermarkets, and food processing units.

GST Compliance for Refrigerator Dealers and Manufacturers

Refrigerator manufacturers, wholesalers, and retailers must comply with GST regulations to ensure smooth operations and avoid penalties. The key compliance requirements include:

GST Registration

Businesses with an annual turnover exceeding ₹40 lakh (₹20 lakh for specific states) must register under GST.

Tax Invoicing

All invoices must include the correct HSN code, applicable GST rate, and tax amount to ensure transparency and compliance.

E-Way Bill

For inter-state transportation of refrigerators where the shipment value exceeds ₹50,000, an E-Way Bill must be generated.

GST Return Filing

Businesses must file regular returns, including:

• GSTR-1: Details of outward supplies (sales) to be filed monthly or quarterly, depending on turnover.
• GSTR-3B: Summary return including total sales, tax liability, and input tax credit (ITC) claims, filed monthly.
• Annual Return (GSTR-9): A yearly summary of all transactions and tax payments.

Input Tax Credit (ITC) on Refrigerators

Businesses that purchase refrigerators for commercial use—such as in hotels, retail stores, warehouses, and other business premises—can claim ITC on the GST paid. However, they must meet the following conditions:

• The refrigerator is used exclusively for business purposes and not for personal use.
• A valid tax invoice is available, clearly mentioning the HSN code, GST rate, and tax amount.
• The business is registered under GST and has filed the necessary returns.

ITC Restrictions

• No ITC for Personal Use : If a business owner purchases a refrigerator for personal or household use, they cannot claim ITC on the GST paid.
• No ITC for Exempted Businesses : Businesses that deal in GST-exempt goods or operate under the composition scheme cannot claim ITC.

Ensuring compliance with these GST regulations helps businesses manage their tax liabilities effectively while maximising available credits.For businesses, claiming Input Tax Credit (ITC) on refrigerators used in commercial setups can reduce tax liability and improve cash flow. However, personal buyers cannot claim ITC, making refrigerators relatively more expensive for home use.

GST on refrigerators significantly impacts both pricing and business compliance. While household refrigerators attract a high 28% GST, commercial refrigeration units have a lower 18% GST, making them more affordable for businesses. Consumers and retailers should understand HSN codes (8418) and tax slabs to ensure proper invoicing and compliance.Given the impact of GST on refrigerator prices, buyers should always compare costs, check for ITC eligibility (if applicable), and ensure that GST is correctly calculated in their invoices. If you are a business dealing in refrigerators, staying GST-compliant with proper tax filings, invoicing, and e-way bills is crucial to avoid penalties.Whether you’re a consumer looking to buy a fridge or a business selling them, understanding GST and HSN codes helps you make informed financial decisions. If you're uncertain about GST compliance or ITC claims, consulting a tax expert can help streamline your financial planning.