GST Rate And HSN Code for Air Conditioners

Introduction

The Goods and Services Tax (GST) regime in India has notably impacted the pricing, taxation, and market positioning of air conditioners. Classified as luxury items, air conditioners attract the highest GST slab of 28%. Unlike many electronic appliances that saw tax reductions under GST, air conditioners experienced a rate increase—underscoring their status as premium products. This GST rate also extends to installation services, making the transaction a composite supply. Additionally, GST is applicable on air conditioner spare parts and accessories, further influencing the total cost. In this article, we delve into the applicable GST rate on air conditioners, relevant HSN codes, and key considerations for both consumers and businesses

What is the GST Rate on Air Conditioners?

Under India’s Goods and Services Tax (GST) framework, air conditioners—whether split or window models—are taxed at 28%, the highest GST slab. This rate is applicable to both residential and commercial units, reflecting their classification as luxury goods. Unlike other electronic appliances that saw reduced tax rates post-GST implementation, air conditioners experienced a rate hike, confirming their premium status. Notably, there are currently no GST exemptions for AC sales in India

Applicability of GST on Air Conditioners

GST is levied on almost all electronic goods, including air conditioners. The GST system comprises four main tax slabs: 5%, 12%, 18%, and 28%. While essential items are placed in the lower slabs, luxury goods such as air conditioners are categorized under the highest 28% slab. This categorization reinforces the view of air conditioners as high-end products

How is the Value of Supply Calculated for ACs under GST?

The value of supply for air conditioners under GST is based on the transaction value, which includes the total amount paid or payable for the goods and services involved. Since installation is often bundled with the sale of an AC, installation charges are also included in the taxable value.
Formula:
Value of Supply = Sale Price + Installation Charges

Air Conditioner Pricing: Before vs. After GST

Before the GST rollout, air conditioners were subject to a mix of indirect taxes such as VAT (12.5%–14.5%), excise duty (12.5%), and service tax, leading to a cumulative tax burden of up to 27%.

Post-GST, a unified rate of 28% was introduced. Although this represents a 1%–5% increase in the effective tax rate, the GST structure eliminated regional pricing differences, ensuring price uniformity across India.

Comparison Table: Before and After GST on ACs

Particulars	Before GST (₹)	After GST (₹)
Manufacturing Cost	60,000	60,000
Excise Duty (12.5%)	7,500	–
Total Cost of Manufacturing	67,500	60,000
Transportation Charges	5,000	5,000
Additional Value-Added Costs	5,000	5,000
Final Product Price	88,350	89,600
VAT (14%) / GST (28%)	10,850	19,600

HSN Code for Air Conditioners

Air conditioners are categorized under different HSN codes based on their type and features. Below is a breakdown:

HSN Code	Description
8415	Air conditioners with motor fans for temperature and humidity control
841583	ACs without an integrated refrigeration unit
84158310	Split ACs (2 tonnes and above), without refrigeration units
84158390	Other ACs not incorporating refrigeration units

Input Tax Credit (ITC) on Air Conditioners

Businesses can claim Input Tax Credit (ITC) on air conditioners if they are used as capital assets and are not restricted under Section 17(5) of the CGST Act. ITC is disallowed only if the ACs are used for personal purposes or form part of immovable property.

According to the General Clauses Act, 1897, immovable property includes items permanently affixed to land or buildings. However, since most air conditioners are removable and portable, they are not considered immovable.
Centralized air conditioning systems, when classified as plant and machinery, are eligible for ITC—provided they are used for business operations and not as part of building infrastructure

Is GST Applicable on Imported Air Conditioners?

Yes, imported air conditioners are subject to GST in India. To promote domestic manufacturing, the government has imposed high duties on imports. Taxes levied on imported ACs include:

Basic Customs Duty (BCD): 20%
IGST: 28% (on assessable value + BCD)
Social Welfare Surcharge: 10% on the total of BCD and IGST

Key Update from the 54th GST Council Meeting

In a notable decision from the 54th GST Council Meeting, the GST rate on Roof Mounted Package Unit (RMPU) air conditioning systems—used in railways—was fixed at 28%. This move aligns with the broader policy of taxing luxury goods at the highest slab

About the Author

Rohan

Rohan is a seasoned content writer with expertise in business registration, tax regulations, trademark law, and corporate compliance. His well-researched articles offer clear, practical guidance, empowering businesses to confidently navigate complex legal and regulatory landscapes

May 31, 2025

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