🛋️ GST Applicability & Tax Rates on Furniture Manufacturers in India

The Goods and Services Tax (GST) regime in India has significantly impacted the furniture manufacturing industry. Understanding the applicable GST rates and the nuances of Input Tax Credit (ITC) is crucial for manufacturers to ensure compliance and optimize their tax liabilities.

📊 GST Rates on Furniture Based on Materials

The GST rates for furniture vary depending on the material used in manufacturing. Here's a breakdown:

🪑 Wooden Furniture

• GST Rate: 12%

• HSN Code: 9403

• Description: Includes tables, chairs, wardrobes, beds, and other furniture primarily made of wood.

🪵 Plywood and Laminated Wood

• GST Rate: 28%

• HSN Code: 4412

• Description: Materials used in the production of wooden furniture.

🛠️ Iron and Steel Furniture

• GST Rate: 28%

• HSN Code: 9403

• Description: Furniture made from iron or steel, including almirahs, tables, and chairs.

🪑 Cane Furniture

• GST Rate: 28%

• HSN Code: 9403

• Description: Furniture made from cane, rattan, or bamboo.

🛏️ Mattresses and Bedding

• GST Rate: 18%

• HSN Code: 9404

• Description: Includes mattresses, cushions, and similar bedding items.

💡 Input Tax Credit (ITC) for Manufacturers

Manufacturers can claim ITC on the GST paid for raw materials used in the production of furniture. This mechanism allows businesses to offset the tax paid on inputs against the tax payable on outputs, thereby reducing the overall tax burden.

Example:

If a manufacturer purchases plywood worth ₹1,00,000 for producing wooden furniture, and the GST paid is ₹28,000 (28% of ₹1,00,000), this amount can be claimed as ITC. When the finished furniture is sold, the manufacturer will charge GST on the sale price but can offset the ₹28,000 ITC against the output tax liability.

📈 Impact of GST on Furniture Manufacturers

While GST has streamlined the tax structure, it has also led to increased tax liabilities for certain segments of the furniture industry. For instance, the higher GST rate on plywood (28%) compared to the previous VAT rate (5-6%) has increased the cost of production for wooden furniture. However, the ability to claim ITC on inputs helps mitigate this impact to some extent.

Conversely, manufacturers of iron and steel furniture face a higher tax burden under GST, as the applicable rate is 28%, compared to the previous VAT rate of 12.5%. This increase can affect pricing and profitability.

✅ Summary Table

🧾 Conclusion

Understanding the GST applicability and tax rates is essential for furniture manufacturers to ensure compliance and optimize tax liabilities. By effectively utilizing ITC and staying informed about the latest GST provisions, manufacturers can navigate the tax landscape efficiently.