GST GST Rate

Impact of GST Rate on Furniture Manufacturers

In 2022, the furniture market in India had a value of about USD 23.12 billion. In addition, during the projected period of 2023-2028, the market is anticipated to expand at a CAGR of 10.9%. GST and customs duty are the only two indirect taxes in India. The GST tax system has incorporated the remainder of the many additional indirect taxes. When goods and services are produced, manufactured, and consumed by a person or business as a capital asset, GST, an additional indirect tax, is imposed. The end consumer or producer is ultimately responsible for paying the GST, which eliminates double taxation by charging value additions made at various manufacturing phases.

Types of furniture manufacturing industries

In India, you can find many types of different furniture with different raw materials. Some of the common types of furniture manufacturing businesses are:

• Wooden Furniture
• Plastic Furniture
• Steel Furniture
• Bamboo Furniture
• Other Furniture

Wooden Furniture

The GST rate for wooden furniture is 12%. All forms of wooden furniture, including chairs, tables, beds, closets, and other wooden objects, are included in this.

Plastic furniture

A 12% GST tax is applied to plastic furniture. This includes furniture used in homes and offices, such as chairs and tables.

Steel furniture

The GST rate for steel furniture is 18%. All steel furniture, such as chairs, tables, and cabinets, falls under this category.

Bamboo Furniture

The GST rate for bamboo furniture is 12%. This includes bamboo furniture used in homes and offices, such as chairs and tables.

Upholstered furniture is subject to an 18% GST rate along with other furniture items. It’s vital to remember that GST covers both ready-made furniture and furniture created to order. The same GST charges apply to ready-made furniture as well as customized furniture.

GST impacts wooden furniture manufacturing

When the GST on the wooden furniture is calculated, all the wooden materials included, along with the wood as a raw material, are also considered for the GST. Instead of the average VAT rate of 12.5%, the final items produced by the producer of wooden furniture will be subject to a 12% GST tax.¹ Most pieces of wooden furniture are primarily made using plywood. The GST rate for plywood has increased from the existing average VAT rate of 5-6% to 28%. There is a strong chance that the price of wooden furniture will rise as a result of the increased tax rate on plywood.

Goods	GST Rate
Wooden boxes, crates and drums. The wood is used for making walking sticks, umbrellas, tool handles, or something similar.	12%
Bamboo, cane or rattan furniture	12%
Bamboo furniture	18%
Bamboo or cane furniture ( wholly made of these)	12%
Other furniture with full or some parts are of cane or bamboo	18%
Residual wood pulp manufacturing lyes which are de-sugared or chemically altered, including lignin sulfonates where tall oil is excluded	18%
Wood tar, vegetable pitch, wood naphtha, Brewers’ pitch wood tar oils, and other resin- and acid-based preparations, as well as a combination of vegetable pitch and wood	18%
Creosote	18%
All timber furnishings and ornaments used in kitchens or as tableware (apart from those items mentioned at a GST rate of 28%)	12%
Plywood, laminated wood, fibre wood, and any other materials that resemble or are connected to wood	28%
Firewood or wood charcoal	Exempt
Wood waste	5%
Cane furnishings	28%

GST impact on Iron and steel furniture manufacturing

Under GST, steel and iron furniture has also become more expensive. In the past, iron or steel furniture was subject to an average VAT rate of 12.5%, but under the GST, all furniture aside from hardwood furniture will be subject to a 28% rate of taxation. Regardless of the properties of the metal, the GST will be applied to Iron and steel at a rate of 18% as opposed to the typical VAT rate of 5%. Furniture makers who use Iron and steel would be entitled to claim an ITC for the tax they paid on imports.

Input Tax Credit

Subject to certain restrictions that also apply to other manufacturers, manufacturers of furniture can obtain input tax credits If the furniture is used to construct “immovable property,” as that phrase is defined in section 17(5) of the CGST Act of 2017, the ITC is prohibited and not allowed. Additionally, most furniture, like a couch, chairs, tables, etc., is portable or easily moved from one place to another. They will be recognized as movable property and be eligible for ITC. In addition, the manufacturer must have inventory accompanied by legitimate invoices in order to be eligible for the ITC.

Impact of GST on the furniture manufactures

The Goods and Services Tax (GST) reform in India included the introduction of the furniture GST rate in 2017. With this change, several taxes and charges were replaced with only one tax in an effort to improve the taxing structure. Before the introduction of the GST, a number of taxes and levies applied to furniture, such as excise duty, VAT, and customs duty, which added complexity and caused confusion in the taxation structure. The furniture business has benefited greatly from the implementation of the GST. First off, the aggregate rate of taxes and duties previously in effect has been reduced by the GST rate for furniture. Because of this, furniture is now more accessible to consumers, which has increased demand for furniture in India. Second, by making it simpler for furniture sellers and producers to comply with rules, firms’ compliance cost has decreased.

Conclusion

One of the industries impacted by the introduction of the

was the furniture sector. The higher tax rate directly impacted the cost of manufacturing and furniture prices, which decreased consumer demand for furniture. However, the introduction of GST also decreased consumer taxation, which was advantageous for the furniture sector.

Frequently Asked Questions

1. https://www.gst.gov.in/