GST on air conditioners in India is 18%. This rate applies uniformly to split, window, and central AC units for all new purchases. The rate took effect on 22 September 2025. The government moved air conditioners out of the old 28% “luxury goods” bracket as part of the broader GST 2.0 reforms.
Before GST, air conditioners attracted multiple taxes totaling roughly 31–35%. The unified GST regime first standardized this at 28%. The September 2025 reform then reduced it to 18%, making ACs meaningfully more affordable than in either the pre-GST or early-GST era.
Key Takeaways
- GST on air conditioners is 18%, down from 28% before 22 September 2025, a 10-percentage-point cut.
- This applies to split, window, and central AC units alike, whether purchased individually or as part of a commercial installation.
- Installation services, when billed separately, also attract 18% GST. This is the same rate as the AC unit itself, since both categories were standardized in the same reform.
- Businesses can claim Input Tax Credit on ACs used for genuine business purposes, subject to Section 17(5) restrictions on immovable property.
- Air conditioners fall under HSN code 8415, with specific sub-codes for window, split, vehicle, heat-pump, and central/commercial units.
- Exported air conditioners remain zero-rated, with exporters eligible for a full refund of input taxes.
What is the GST Rate on Air Conditioners?
The table below shows the current GST treatment across purchase scenarios:
| Scenario | GST Treatment |
|---|---|
| New AC from a registered dealer | 18% GST on the full selling price |
| Second-hand AC from a registered dealer | 18% GST on the dealer’s profit margin only, under the margin scheme |
| Second-hand AC from an unregistered seller | No GST applies |
| Installation services (billed separately) | 18% GST |
Note: Both the AC unit and installation services now attract the same 18% rate. Before the September 2025 reform, ACs attracted 28% GST and installation services attracted 18%. The billing method affected the total tax.
Air Conditioner HSN Code for Different Types
Air conditioners fall under HSN code 8415. This heading covers AC machines with a motor-driven fan and elements for changing temperature and humidity. The classification has not changed with the rate reform. Only the applicable GST rate has changed.
The table below shows the HSN codes for different types of air conditioners:
| HSN Code | Description |
|---|---|
| 84151010 | Window-type ACs |
| 84151090 | Other fixed-type ACs (like split units) |
| 84152000 | ACs for motor vehicles |
| 84158110 | ACs with heat pump function |
| 84158200 | Central and commercial AC systems |
Accurate HSN classification supports correct GST returns filing. It also helps avoid compliance issues during tax audits.
How is the GST on AC Calculated?
GST is calculated on the value of supply, which is the total taxable amount. It includes the unit price and any additional charges bundled into the same invoice.
The GST treatment can vary based on how the AC and related charges are billed:
- Composite supply: When a dealer bills the AC and installation together on one invoice, both attract 18% GST. This is because both components carry the same rate.
- Separate billing: When the installation is billed separately, the AC and installation service still attract 18% GST each.
Transport charges, handling fees, and other incidental costs form part of the taxable value when included in the sale agreement. Discounts reduce the taxable value accordingly.
Input Tax Credit (ITC) For GST on AC Purchase
Businesses can claim Input Tax Credit (ITC) on AC purchases if they meet these conditions:
- A valid GST invoice from a registered supplier.
- The AC is used solely for business operations.
- Proper records and documentation are maintained.
Personal use of ACs doesn’t qualify for ITC, per Section 17(5) of the GST Act. of the GST Act.
How to Claim GST Refund for AC Exports?
Air conditioners sold for export remain zero-rated under GST, unaffected by the domestic rate change. Exporters can claim a full refund of input taxes through either of two methods:
1. Export with Payment of IGST
- Exporters pay 18% IGST at the time of export.
- After shipping and filing the Shipping Bill and GSTR-1, they can claim a refund of the IGST paid, processed automatically through ICEGATE.
2. Export without Payment of IGST (Under LUT)
- Exporters file a Letter of Undertaking (LUT) to avoid paying IGST at export.
- They can then claim a refund of unutilized ITC by filing Form RFD-01 on the GST portal, along with export invoices, shipping bills, and proof of receipt in foreign currency.
Tips: File refund applications within 2 years. Maintain accurate digital records and match invoices with customs data. Use the GST portal to track your refund status.
Compliance Tips for Dealers: GST on AC
AC dealers must maintain proper GST compliance to avoid penalties. Registration requirements vary based on annual turnover thresholds.
- GST registration is mandatory once turnover exceeds ₹40 lakh (₹20 lakh for special category states).
- Accurate invoicing must include correct HSN codes and the applicable 18% tax rate.
- E-invoicing required for businesses with turnover above ₹5 crore.
