What are the Effects of GST on AC in the Festive Season?


During the festive season, many retailers and e-commerce platforms offer discounts, but due to the heavy GST on electronic devices, you can’t buy an AC as you have other expenses. And on top of it, you have to figure out what the GST is on the AC; do the installation, and other services fall under the final amount? Also, if you are a small business owner, can you claim ITC?

While you do your research on this, the discount season has passed!

This article covers all your issues to save you valuable time and resources. What is the GST on AC? What is included in the final price? Most importantly, how can you buy AC if you need more cash?

As you might know, almost all electronic goods have the GST tax applicable to them.

Let’s first understand what GST is.

What is GST?

The Goods and Services Tax is a destination-based tax on consumer goods and services. What we mean by the destination-based tax is that the tax burden is to be borne by the final consumer, the person buying the AC for their consumption. It might be for your personal use, home, apartment, office, or workshop. As long as you are the final consumer, you must pay GST.

GST Rates

GST tax rates are divided into four segments:

  1. 5% GST for essential goods
  2. 12% for standard goods
  3. 18% for standard goods
  4. 28% for luxury goods

ACs are considered luxury goods, which means they are purchased for lavish use, so they have a 28% GST rate.

According to HSN Code 8415 of CBIC, Air conditioners with motor fans, refrigerator units, and split air conditioners are also covered under the 28% slab.

Installation and Other Charges

When you buy AC during this festive season, keep in mind that installation charges are also included in the final price of the AC. So if the seller is trying to sell the AC without the installation services, please ensure that they are added.

The Maharashtra GST Advance Appellate Authority has clarified this point in the Nikhil Comforts case. The court has ordered that the “supply of goods and services is connected and interdependent.” This means that the unit and installation are inextricably linked. After all, you can’t possibly use AC just by purchasing it; you have to install it, which is the seller’s job.

Price of AC

Before the implementation of GST, the VAT-era tax rate on ACs was around 12-14.5 per cent. After the GST, the prices of ACs have significantly increased. This is both true and false.

Consider this: while tax rates have risen since the implementation of GST, the manufacturer can now claim the Input tax credit on the raw materials of ACs, which has stabilised their prices. During the VAT era, there were hidden variables that fluctuated prices.

Ways to Buy AC When You Have a Cash Crunch

Now, if you are among those who wish to take advantage of the discounts offered on ACs during this festive season but cannot spend a massive chunk from their pockets, Piramal Finance offers multiple easy-payment loan options.

Personal Use AC

If you buy AC for personal use at your house or apartment, you can take a quick loan from Piramal Finance. This loan has no prepayment penalties, so there is no need for a down payment. Also, you don’t have to worry about the documentation, as the company executives will do most of the work, and you can get a loan quickly.

Professional Use AC

It will be a significant expense if you are an entrepreneur or a small-business owner and need to purchase multiple AC units for your company. A small business sometimes cannot bear this burden.

In this case, you can also get a business loan or professional loan from Piramal Finance, depending on the nature of the business or your needs.

These are non-collateral loans, so you don’t have to worry about the collateral.

Who Can Apply for a Personal Loan for an AC?

Salaried employees

If you are an employee that gets paid regularly, whether weekly, biweekly, or monthly, working in any of the following institutions:

  1. private sector
  2. public sector or enterprise
  3. MNCs
  4. proprietorship or partnership
  5. social sectors like NGOs

Then you can apply for a personal loan to purchase an air conditioner during the holiday season.

Self-employed individuals

  1. You are considered self-employed if you run a private practice as a lawyer, CA, or architect.
  2. If you have your business enterprise or a partnership firm,

and want to buy heavy electronics like an AC for your personal use, then this festive season, you can take a personal loan for an AC.

Who Can Apply for a Business Loan?

If you are a self-employed professional like a doctor or CA, or a non-professional like a business owner, and wish to install an AC for your professional use, such as a doctor for his clinic or a pharmaceutical shop owner for her shop, AC in such conditions is considered a business requirement. You can apply for a business loan.

To be eligible for the business loan, your business or practice must be at least four years old and have one property registered in your name: your house, a shop, or office space.

You can find more details here if you’d like.

It is no secret that today there are many loan-related frauds. So, you should take your loans from trustworthy finance aggregators like Piramal Finance. Piramal Finance is a well-known, reliable aggregator legally registered, has a dedicated workforce, and promotes financial empowerment.