GST on Furniture Items in 2022 [Tax Rates, HSN Codes]
GST on Furniture
The GST Council on 18th May 2017 declared the tax rate to be levied on certain goods and services, including furniture. Below is a complete analysis of applicability and changes in tax rates on different kinds of furniture manufacturers.
1. GST rates on Wood and Wooden Furniture
The final cost of wooden furniture is determined by the cost of raw material supplies. The table below depicts the tax rates levied on wood and wooden furniture under GST and VAT:
Particulars | GST | VAT |
Items like wooden boxes, drums, crates, the wood used in making an umbrella, walking sticks and tool handles or anything similar | 12% | Average 4-5% |
Wood pulp, bamboo pulp | 12% | Average 4-5% |
Residual lyes from the manufacture of wood pulp, whether or not concentrated, de-sugared or chemically treated, including lignin sulphonates and excluding tall oil | 18% | Average 4-5% |
Wood tar, vegetable pitch, wood naphtha, brewers’ pitch, wood tar oils and similar preparations based on rosin, resin acids or a vegetable pitch and wood creosote | 18% | Average 4-5% |
Any wooden furniture and wooden decorates used as tableware or kitchenware (except those notified @28 % under GST) | 12% | Average 12.5% |
Fibre wood, plywood, laminated wood and other materials with an appearance of wood or woody in nature | 28% | Plywood – Average 5-6% Others – Average 12.5% |
Firewood or wood charcoal | Exempt | Exempt |
Wood in chips, sawdust or waste of wood | 5% | Average 4-5% |
Cane furniture | 28% | Average 4-5% |
The final output is taxed at the rate of 12% under GST in comparison to the 12.5% tax rate under VAT. Further, plywood, a major component in the manufacturing of wooden furniture, is taxed at a higher rate of 28% (Average 5%-6% under VAT). Due to this, the cost of wooden furniture has increased. However, the manufacturer can claim the ITC on the tax paid to purchase plywood to make the furniture.
For Example: Furniture Avenue produces various wooden articles like chairs, tables, cupboards, etc. A customer purchased a table from Furniture Avenue for Rs. 30,000. Furniture Avenue purchased Plywood for Rs. 10,000 to make the table.
Tax Liability under VAT
Tax on table | Rs. 3750 (12.5% of 30,000) |
ITC available on purchase of Plywood | Rs. 600 (6% of 10,000) |
Net tax liability | Rs 3150 (3750 – 600) |
Tax Liability under GST
Tax on table | Rs. 3,600 (12% of 30,000) |
ITC available on purchase of Plywood | Rs. 2,800 (28% of 10,000) |
Net tax liability | Rs 800 (3600 – 2800) |
Hence, Furniture Avenue effectively reduced its tax liability under GST by using ITC available on the purchase of plywood (Rs. 2,800).
2. GST rates on Iron or Steel Furniture
Iron or steel furniture prices have also increased under GST. The VAT rate applicable on them was 12.5%, whereas any article of furniture, except wooden furniture, is taxed at 28% under GST.
The GST rate on iron or steel used to make furniture is taxed at 18% in comparison to the average 5% VAT rate. However, the input tax credit is available to manufacturers on such purchases.
Also Read: Mattress Brands In India
GST Rates updated as on 31.03.2021
The GST rates on certain goods have changed since its introduction. The rate changes are given effect through amending notifications issued from time to time.
Updated GST rates schedules for goods as of 15.11.2017 [notification No.1/2017-Central Tax (Rate), dated 28th June 2017, as amended from time to time], and updated till 31.03.21, the rate on furniture items is as follows:
Description of Goods | Current rate from 15.11.2017 | Previous Rate |
Furniture wholly made of bamboo, cane or rattan | 12% | 18% |
Medical, surgical, dental or veterinary furniture | 18% | Unchanged |
Other furniture [other than furniture wholly made of bamboo, cane or rattan] and parts thereof] | 18% | 28% |
Furniture of bamboo, rattan and cane | 12% | 18% |
Metal furniture of a kind used in offices | 18% | 28% |
Plywood, veneered panels and similar laminated wood | 18% | 28% |
Other furniture and parts thereof - metal furniture of a kind used in offices: of steel | 18% | 28% |
Other furniture and parts thereof - metal furniture of a kind used in offices: other | 18% | 28% |
Other metal furniture | 18% | 28% |
Other furniture and parts thereof - other metal furniture: of steel | 18% | 28% |
Other furniture and parts thereof - other metal furniture: other | 18% | 28% |
Also read:
1) GST on Food items
2) GST on works contract
3) Top-10 Highest Tax Paying States in India
4) Mattress Manufacturers in India
5) Plywood Manufacturers In India
6) Furniture Manufacturers in India
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FAQs
Q. What is the GST on furniture?
Ans. Unfortunately, the GST on furniture has been detrimental. The tax rates under the GST regime have increased substantially in comparison to VAT, and hence the overall tax liability has also increased. However, over time the government has reduced the GST rates on furniture, which has provided relief to the furniture industry, but the rates are still higher than those in the VAT regime.
Q. Is Input Tax Credit available on furniture?
Ans. If the furniture is used for the construction of "immovable property", as defined under section 17(5) of the GST Act, the ITC is blocked and is not allowed. For example, walls, ceilings, floors, etc.
However, in general situations, furniture is movable, i.e., it can be shifted easily from one place to another; for example, sofa, chair, table, etc. Hence, they will be considered as movable property, and ITC will be allowed on them.
Q. Is GST applicable on surgical or medical furniture?
Ans. Yes, GST is applicable at the rate of 18% on dental, surgical, medical or veterinary furniture such as hospital beds, operating tables, examination tables etc.
Q. Which chapter of the HSN code deals with furniture?
Ans. Chapter 94 of Harmonised System of Nomenclature (HSN) code, which classifies various products, states the HSN code and GST Rate for furniture, mattress and lamps.
Q. What is the GST rate applicable on the scrap sale of furniture?
Ans. GST rates applicable on scrap sale of furniture can be categorised as follows:
Description | GST Rate |
Wood scrap | 5% |
Aluminium Waste and Scrap | 18% |
E-Waste | 5% |