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GST Rate on Domestic Appliances and Electrical Machinery

The Domestic appliance that we use in our daily life, have become a part of our life. While the electrical machinery are also used on vast scale in majority of all the business. The government imposes the goods and service taxes on both domestic appliance and the electrical machinery. Domestic appliances like refrigerators, cleaners, washing machines etc have become a need in our today’s world. The implementation of GST has affected both the domestic appliances and electronic machinery. The market of these appliance and machines is growing rapidly in India. So the GST taxes that are imposed on these goods will impact both the common people as well as big companies. The GST will have different impacts on both the demand and supply of domestic appliances and the electrical machinery.

What all can be included in domestic appliance and electrical machinery?

In our day to day life domestic appliance and electrical machinery play an important part and cover a diverse range of both. The industry highly contributes to the people’s comfort, fundamental necessities, convenience which all ranges from daily items to advanced needs. Some of the very common domestic appliance that is used in our daily life is:

Refrigerators	Dryers
Ovens and stoves	Irons
Microwaves	Air conditioner
Dishwashers	Heaters
Blenders	Fans
Coffee makers	Humidifiers and dehumidifiers
DVD and Blue-ray players	Televisions
Toasters	Audio systems (speakers, sound bars, etc.)
Washing machines	Gaming consoles

While some of the common electrical machinery includes:

Motors and generators

Pumps and compressors

Conveyors and elevators

Power generators Excavators

Bulldozers

Concrete mixers

Solar panels

Wind turbines

Battery storage systems

Pre-GST scenario of domestic appliance and electrical machinery

In the tax system prior to goods and services tax, there were different types of taxes levied on singular goods and services. The value added tax was imposed on domestic appliances and this VAT rate used to be different in all states of India. The general range for the VAT was in between 11% – 15%. Similar to VAT, excise duty was also imposed on the electronic appliances at 12.5%. Other necessary taxes were also added along with these. At the end stage when the consumer used to buy the goods the taxes used to reach around 25-26%. This cascading effect of taxes was one of the major disadvantages of tax system ¹prior to GST.

GST Rates for domestic appliance and electrical machinery

GST Rate	Domestic Appliance and Electrical Machinery
Hand Pumps And It’s Parts	5%
Solar Water Heater And System	12%
Bio-Gas Plant	18%
Windmill And Operating Electricity Generator	12%
Sewing Machines	12%
Composting Machines	12%
Water Power Driven Pumps	18%
Dairy Machinery For Production Of Milk	18%
Nuclear Reactor And Cartridge	12%
Central Heating Boiler	12%
Producer Gas Or Water Gas Generator	18%
Air And Vacuum Generator	18%
Refrigerators	18%
Freezers	18%
fire extinguisher	12%
Fork Lift Truck	18%
Bulldozer And Road Roller	18%
Machinery For Industrial Preparation	18%
Turbo-Jets, Turbo-Propellers And Other Gas Turbines – Turbo-Jets	18%

Impact of GST on domestic appliance and electrical machinery

• The Indian government levies a charge called GST on all goods and services in India. Whenever people buy goods or render services GST is imposed on them.
• The goods and service tax like other industries have also affected the electrical machinery industry of India.
• The fall in the GST rate from 28% to 18% has increased the demand for the electrical machinery to great extent in India. The taxes are quite low as compared to the previous rates.
• The GST on generators has been reduced to 18%, which is quite low then before. This reduction of taxes will increase the demand on the electric generators.
• Because of the reduced taxes the cost of manufacturing will also reduce and the manufacturers then will be able to pass on the benefits to their consumers also.
• This will result into more sales and income of manufacturer will also increase.
• The government reduced the tax rate on essential items such as refrigerators and washing machines from 28% to 18%.
• The Goods and Services Tax (GST) has helped farm equipment, solar and wind- related equipment, but it has had minimal impact on industrial equipment.
• Domestic appliances had a 2 to 3% price increase due to the maximum slab of 28% being imposed on some luxury products.
• These things appear to be considered luxury items by the government. Domestic appliances cost slightly higher with this GST slab.
• India produced an around of 12 million refrigerators during the 2020 fiscal year. In the consumer appliance sector, refrigerators comprised 27% of the total.
• From 2021 to 2027, the air conditioner market in India is anticipated to develop at a CAGR (compound annual growth rate) of 10.7%.
• The only equipment subject to a NIL rate of tax under the GST is electric handlooms utilized in the handicraft business.

Conclusion

In conclusion, The Goods and Services Tax have transformed the taxation landscape in India, benefiting the electrical machinery and domestic appliance industries in particular. With a decrease in rates of taxes under a unified system, many important goods and services have become more affordable, which has increased the demand and growth as a result. The GST’s simplified layout has lessened the complexity while boosting efficiency and transparency. Despite problems like the luxury category, many businesses have profited from GST since it has increased easy access, innovation, and economic growth.

Frequently Asked Questions

1. https://www.startupindia.gov.in/content/sih/en/international/go-to-market-guide/tax-system-india.html