For businesses and consumers negotiating the complexities of India’s Goods and Services Tax (GST), the tax system can frequently be complicated and perplexing. One of the essential aspects of GST is the Harmonized System of Nomenclature (HSN) codes, which play a crucial role in categorizing goods and determining applicable GST/tax rates. So here, we explain about HSN Code for Laptops and Electronic goods with GST rate.
What is HSN Code?
HSN stands for harmonized system of nomenclature. It is an internationally accepted system of names and numbers that classifies goods for customs and taxation purposes. This coding system was developed by the World Customs Organization (WCO) and is used globally to streamline international trade.
Structure of HSN Codes
- Initial Six Digits: The first six digits of the HSN code represent the product category and are used universally.
- Additional Digits: Countries can extend the HSN code by adding additional digits to provide more specificity.
The HSN code for laptops, for instance, is 84713020, where:
- The first two digits 84 denote machinery and mechanical appliances.
- Automatic data processing machines are categorized by the next two digits, 71.
- The last four digits specify laptops and related devices.
Importance of HSN Codes
HSN code should be mentioned on GST invoices and it should also be added in categories of goods or services in all most cases whenever a business getting applied for a GST registration online through GST portal in India.
HSN codes help in:
- Trade Documentation: They standardize product descriptions in international trade.
- Customs Clearance: Simplify customs procedures by providing clear classification of goods.
HSN Code for Laptops
The relevant HSN codes are essential for figuring out GST rates for laptops and other electronic goods. Here are the salient details:
- HSN Code: 84713020
- GST Rate: 18%
All laptops, personal computers, and microcomputers falling under the more general HSN code 8471—which encompasses a variety of automatic data processing devices—are subject to this GST rate.
Note: All most electronic goods also cover under 18% of GST but in some special cases or categories like TV more than 32 inch or Air Conditioner having GST @28%.
Detailed Breakdown of HSN Code 8471
| HSN Code | Description |
| 8471 | Automatic data processing machines and units thereof, magnetic or optical readers, etc. |
| 84713010 | Personal computer |
| 84713090 | Additional portable digital devices that process data automatically |
| 847149 | Additional automated data processing devices |
| 847150 | Processing units that could have input, output, or storage units |
| 847160 | Input or output devices include things like keyboards, printers, and mice. |
| 847170 | Storage units include hard drives, USB drives, and other storage devices. |
| 847190 | Additional automated data processing devices not otherwise categorized |
Relation Between HSN Codes and GST
Companies need to understand the relationship between GST rates and HSN codes. Here’s how it works:
- Identification: When a product is sold, it must be identified using its HSN code.
- Tax Rate Determination: A certain GST rate is associated with each HSN code. The HSN code 84713020 for laptops translates to an 18% GST.
- Compliance: In order to avoid fines during audits, businesses must make sure that their invoices contain the relevant HSN codes.
How GST Rates are Determined in India
The GST Council, which determines the nation’s GST rates, is composed of the finance ministers of the federal and state governments. At regular sessions, the council reviews and modifies tax rates in light of the financial situation and the state of the economy. A brief synopsis of the procedure used to calculate GST rates is provided below:
- Regular Meetings: To discuss tax rates, the council holds regular meetings.
- Economic Considerations: To determine if rates require revision, they evaluate patterns in revenue collection.
- Suggestions: Council members’ suggestions serve as the foundation for adjustments to tax rates.
Historical Context: Tax on Laptops Before GST
Before the introduction of GST in July 2017, laptops were subjected to Value Added Tax (VAT), which varied from state to state, typically ranging from 14% to 15%. This system created confusion and complexity for sellers, who had to navigate different tax rates depending on their location.
Transition from VAT to GST
Here’s how the transition worked:
- Single Tax Rate: The GST established a uniform laptop tax rate that is now set at 18% throughout India.
- Elimination of Multiple Taxes: The GST took the place of a number of indirect taxes, such as excise duty, service tax, and VAT.
- Ease of Compliance: Businesses find it easier to comply with regulations thanks to the single tax rate and HSN code classification.
Tax Levied on Laptops: A Closer Look
GST Calculation on Laptops
When purchasing a laptop in India, the customer pays the Maximum Retail Price (MRP) its inclusive of all the applicable Taxes or GST. For example, the GST calculation for a laptop costing ₹50,000 or MRP is Rs 59000 would be as follows:
- MRP: ₹59,000
- GST Rate: 18%
- ₹50,000 × 18/100 = ₹9,000 is the GST amount.
- ₹59,000 is the total cost (₹50,000 + ₹9,000).
This straightforward calculation provides clarity for consumers regarding how much tax they are paying on their purchases.
HSN Codes for Computer Hardware and Software
In addition to laptops, other parts of computers, both software and hardware, have unique HSN numbers. This is a thorough explanation of HSN codes for typical computer-related products:
HSN Codes for Computer Hardware
| HSN Code | Item Description |
| 8471 | Computers, laptops, and devices that process data automatically |
| 847160 | Devices for input or output (keyboards, mice, etc.) |
| 847170 | Devices for storage (hard drives, USB drives) |
| 847141 | Large mainframe computers and microcomputers |
| 847149 | Additional data processing devices |
HSN Codes for Software
Software is generally categorized differently under HSN codes. Here’s an overview:
| HSN Code | Item Description |
| 8523 | Software packages, including business software |
| 9993 | Custom software developed specifically for a client |
GST on Other Related Products
Apart from laptops, other electronic devices may also have different GST rates depending on their HSN codes. Here’s a brief overview of GST rates on various computer-related products:
| Product Type | HSN Code | GST Rate |
| Laptops and personal computers | 8471 | 18% |
| Input devices (keyboards, mice) | 847160 | 18% |
| Printers | 84716024 | 18% |
| Storage devices (hard disks, USBs) | 847170 | 18% |
| Software (general) | 8523 | 18% |
| Custom software | 9993 | 18% |
Regular Updates to HSN Codes
It’s important to note that HSN codes are subject to periodic updates. The government reviews and revises HSN codes to adapt to changing market conditions, technological advancements, and trade agreements. Therefore, staying informed about any changes in HSN codes relevant to your business is essential to ensure compliance and accurate tax calculations.
Conclusion on GST rate & HSN Code for Laptops and Electronic goods:
With laptops and related products attracting a GST rate of 18%, this knowledge equips consumers with clarity on their purchases and helps businesses maintain compliance with tax regulations.
In a rapidly evolving technological landscape, staying updated with HSN codes and GST rates will ensure smoother transactions, effective inventory management, and a better understanding of the costs associated with electronic goods and its will also helpful for find GST rate & HSN Code for Laptops and Electronic goods.
As GST regulations may change, it is advisable for businesses and consumers to periodically review the latest HSN codes and GST rates to ensure they are operating within the legal framework and benefiting from any potential tax breaks.
ALSO READ