GST Rate on Air Conditioners: Find HSN Code & GST Rate

Air conditioners (ACs), once considered a luxury, are now commonplace in Indian households and businesses. As such, the Goods and Services Tax (GST) implications on ACs are important for manufacturers, retailers, and consumers. Under GST, all goods and services are categorized under different tax slabs and HSN (Harmonized System of Nomenclature) codes for streamlined taxation.

This article breaks down the current GST rate on air conditioners, associated HSN codes, input tax credit rules, and important compliance tips for businesses.

What is GST?

The Goods and Services Tax (GST) is a comprehensive, multi-stage, destination-based indirect tax levied on the supply of goods and services in India. Introduced on July 1, 2017, GST replaced multiple indirect taxes like VAT, service tax, and excise duty. It operates under a dual model—Central GST (CGST) and State GST (SGST) for intra-state transactions, and Integrated GST (IGST) for inter-state transactions. GST aims to create a unified national market, reduce tax cascading, and simplify tax compliance. Businesses can also claim Input Tax Credit (ITC) to offset taxes paid on inputs, enhancing transparency and efficiency in the taxation system.

Why is GST on AC in India Charged?

GST is deducted (levied) on air conditioners (ACs) because they are classified as a luxury or non-essential item under the Goods and Services Tax framework. The government places ACs in the 28% GST slab, which is the highest, to:

1. Generate higher revenue from non-essential/luxury goods.
2. Promote equitable taxation, where luxury items bear more tax than essential goods.
3. Discourage excessive energy consumption, as ACs significantly contribute to electricity demand.

So, when you buy an AC, the GST is added to the selling price, and the seller collects and deposits it with the government.

GST on Air Conditioners: Quick Overview

Detailed Breakdown: GST Rate on Air Conditioners

Here is the detailed breakdown of the GST rates on Air Conditioners. Let’s learn:

Current GST Rate on Air Conditioners

Air conditioners are classified as a luxury item under GST and fall under the highest tax bracket of 28%.

• GST Rate: 28%
• 14% CGST + 14% SGST (for intrastate supply)
• 28% IGST (for interstate supply)

This GST rate is applicable irrespective of brand, capacity (e.g., 1 ton, 1.5 ton, 2 ton), or type (window, split, inverter).

HSN Code for Air Conditioners

The HSN code is essential for classifying goods under GST for proper tax filing.

HSN Code 8415 Includes:

• Window ACs
• Split ACs
• Cassette ACs
• Portable ACs
• Inverter ACs
• ACs with refrigeration components

Note: This HSN code also includes air conditioning machines used in vehicles, but vehicle-specific air conditioners are often separately classified when built-in.

GST Components for Businesses Dealing in ACs

Under the GST regime, the Input Tax Credit (ITC) mechanism allows registered businesses to claim credit for the GST paid on purchases that are used in the course or furtherance of business. In the case of air conditioners (ACs), ITC eligibility depends on how and where the AC is used.

Eligibility Criteria for Claiming ITC on ACs

Businesses can claim input tax credit on the purchase of air conditioners only if the ACs are used strictly for business-related purposes. For example:

• ACs installed in office spaces for employee comfort.
• ACs placed in retail showrooms or outlets to maintain a welcoming environment for customers.
• ACs used in warehouses or manufacturing units to maintain product quality or improve operational efficiency.

In such cases, the business can claim full credit of the 28% GST paid on the air conditioner as ITC in their GSTR-3B returns, effectively reducing their net GST liability.

Cases Where ITC on ACs Is Not Allowed

There are certain instances where input tax credit on the purchase of air conditioners is not permissible under GST rules:

• Personal Use: If the AC is purchased for the personal use of an employee, owner, or director at home or in a non-business environment, ITC cannot be claimed.
• Gifts or Freebies: If the air conditioner is given away as a gift, promotion, or freebie (even for business marketing), ITC is restricted under Section 17(5) of the CGST Act.
• Mixed-Use (Business + Personal): If the AC is partially used for personal purposes, the ITC must be proportionately reversed.

Example:

GST Compliance for Sellers & Retailers

1. Correct HSN Code Usage (8415) is mandatory in invoices if turnover > ?5 crore.
2. E-invoicing applicable if turnover crosses ?5 crore (FY 2023–24 onwards). GST Returns Filing under GSTR-1 will be applicable for outward supplies (sales), and GSTR-3B will be applicable for summary returns.
3. Input Matching is crucial—make sure vendor invoices reflect in GSTR-2B.
4. GST on AMC (Annual Maintenance Contracts) for ACs is 18%, separate from product GST.

Tax Implications on Related Products

Before getting the details of hsn and sac on AC related products, you need to learn what are HSN and SAC. HSN (Harmonized System of Nomenclature) is a globally recognized coding system used to classify goods under GST. SAC (Service Accounting Code) is used to classify and tax services under GST in India. Let’s learn the GST charges and codes in details.

Comparison with Pre-GST Era (VAT + Excise)

Before GST, air conditioners were taxed at:

• Excise Duty: ~12.5%
• VAT: ~12.5%–14.5% (depending on state)

Effective Tax: ~27%–29%

Thus, the current GST of 28% is roughly similar to the cumulative taxes in the pre-GST era, but with simplified compliance and ITC advantage.

GST on Air Conditioners: B2B vs B2C Impact

Latest Updates & Notifications (As of 2025)

As of April 2025, there has been no revision in the GST slab for air conditioners, which continue to attract the highest GST rate of 28%. The HSN code 8415 assigned to all types of air conditioners also remains unchanged, ensuring consistency in classification and invoicing. Additionally, as per GST compliance norms, the movement of air conditioners valued above ?50,000 requires the generation of an E-way bill, which is mandatory for transport and logistics tracking. Furthermore, sellers of air conditioners through e-commerce platforms are required to be registered under GST and must adhere to Tax Collected at Source (TCS) provisions as outlined under GST law.

GST Tips for AC Traders, Dealers, and Service Providers

To ensure smooth GST compliance when dealing with air conditioners, businesses should maintain detailed invoices clearly mentioning HSN code 8415, which helps create a transparent audit trail during assessments? Those with an annual turnover of less than ?1.5 crore and engaged only in intra-state supplies may consider registering under the Composition Scheme, though it's not advisable for those dealing in inter-state transactions. When offering combo deals such as AC sales bundled with installation services, it's important to issue separate invoices—one for the product (taxed at 28%) and another for the service (taxed at 18%)—to apply the correct GST rates. Additionally, businesses should carefully assess the applicability of the reverse charge mechanism in case of imported services, such as AMC or technical support received from overseas vendors.

Conclusion

The rate of GST on AC in India is 28%, with HSN code 8415 applicable to all types. While the rate may seem high, businesses can benefit from input tax credit, reducing the effective tax burden. Proper classification, invoicing, and compliance ensure smooth GST operations for traders, retailers, and service providers in the AC industry.

FAQs on GST Charges on AC in India

1. What is the GST rate on air conditioners in India?

Answer: Air conditioners attract a 28% GST rate, which is the highest slab under the GST regime. This includes 14% CGST and 14% SGST for intra-state supplies or 28% IGST for inter-state transactions.

2. What is the HSN code for air conditioners?

Answer: The HSN code for air conditioners is 8415, covering all types of ACs including window, split, inverter, and portable models.

3. Why are air conditioners taxed at 28% under GST?

Answer: ACs are classified as luxury or non-essential appliances. Hence, they fall into the 28% tax slab to generate higher revenue and encourage energy-efficient alternatives.

4. Can businesses claim Input Tax Credit (ITC) on the purchase of ACs?

Answer: Yes, businesses can claim ITC on ACs if the units are used for business purposes, such as in offices or factories. However, ITC is not allowed for personal use or gifts.

5. Is GST applicable on air conditioner installation charges?

Answer: Yes, installation services for air conditioners are taxed separately at 18% GST, even if bundled with the sale.

6. What is the GST rate on AMC (Annual Maintenance Contract) for ACs?

Answer: The GST on AMC services for air conditioners is 18%, as it falls under repair and maintenance services.

7. Can AC dealers and retailers claim ITC on stock purchases?

Answer: Absolutely. AC dealers, resellers, and showrooms can claim full ITC on GST paid for stock purchases meant for resale or trading purposes.

8. Is GST applicable on second-hand or refurbished air conditioners?

Answer: Yes, GST is applicable on the sale of second-hand or refurbished ACs, typically at 28%, unless sold under the margin scheme by a registered dealer.

9. Do online AC purchases attract the same GST rate?

Answer: Yes, buying an air conditioner online attracts 28% GST, regardless of the platform (e.g., Amazon, Flipkart), as long as the seller is registered under GST.

10. Is an E-way bill required for transporting air conditioners?

Answer: Yes, if the value of a single consignment exceeds ?50,000, an E-way bill is mandatory for transporting air conditioners under GST rules.