Impact of GST on the Electronics Industry
In general, GST registration online has had a considerable impact on the electronics industry. As per the GST Act, household items (which form a large percentage of the items purchased by consumers of electrical items) are still considered luxury items. Therefore, even big brands cannot provide any GST benefits to the end users of the items.
The experts anticipate an effect on the electronic markets as the increase in taxes and inflation will increase the price of household items. On the other hand, they expect the consumption of electrical appliances and machinery for commercial purposes to remain stable.
However, the electronics industry has favored lowering the GST on consumer electronics items and waiving the import duty on semi-finished goods. Indian manufacturers are likely to face competition from the importers of cheap electronic parts, which will not be easy due to the current high rate of GST.
GST Applicability:
GST applies to all goods and services provided by the electrical industry, including the manufacturing, distribution, and installation of electrical products and equipment.
GST Tax Rates:
GST has multiple tax rates, and the applicable rate depends on the specific product or service provided. As of my last update, GST had four primary tax rates: 5%, 12%, 18%, and 28%.
Electrical products, components, and appliances may fall under different GST rates depending on their classification. For example:
Some essential electrical items like wires, cables, switches, and sockets may fall under the 18% GST rate.
High-end appliances and luxury electrical goods could attract a higher GST rate of 28%.
Input Tax Credit (ITC):
Businesses in the electrical industry can claim Input Tax Credit on GST paid on their inputs (raw materials, components, etc.) and services. This helps reduce the overall tax liability.
GST Compliance:
Businesses involved in the electrical industry must register for GST if their turnover exceeds the prescribed threshold limit. They are also required to file regular GST returns.
Exemptions and Special Provisions:
Some electrical products and services may be exempt from GST or subject to special provisions. It is essential to consult the GST laws and notifications for details specific to your business.
GST Rates on Electronic and Electrical Items
Previously, the government levied 11% to 12.5% VAT, along with 12.5% excise duty and CST, and the local tax levied was 25% to 26%.
As per the GST regime, the tax levied on electronic items at different rates is as follows:
Devices using renewable energy: For any electronic devices or their parts which run on renewable energy such as bio-gas, solar power, the energy produced by waste materials, or the electricity produced by wind turbines, 5% GST is levied
Mobile phones: As per the GST 2020 regime, 12% GST is levied on all mobile phones, whether a new or old phone
Generation equipment, transmission & distribution, and allied electrical products: Devices such as electromagnets, electrical resistors, printed circuits, electrical apparatuses, industrial electric furnaces and ovens, laboratory furnaces, electrical insulators, transistors etc. all come under the slab of 18% GST
Luxury consumer products: 28% GST is levied on consumer products, both finished and unfinished, such as 32-inch (and larger) TVs, vacuum cleaners, air conditioners, washing machines, electrical grooming products, static converters, sound and video recording and reproducing equipment, etc.
Created & Posted by Navneet Kumar
Income Tax Expert at TAXAJ
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