Whether you are a business owner, employee, or student, we all use electronic devices, especially laptops. Since we are amidst this digital revolution where technology is king, laptops have become an essential device. But have we paused and pondered the impact of GST on laptops? Before we get into that, it is crucial to remember that GST is a destination-based indirect tax levied on every value addition stage. We had many indirect taxes in the earlier tax regime like excise duty, VAT, service tax, etc. To make matters more complicated, each state had different VAT rates. VAT was the predominant taxon laptop before GST and varied from state to state. However, under GST, only a single tax rate can apply to a product throughout the country.
We have done a comprehensive study on the impact of GST on laptops, do read on to know more. The latest GST rate on laptops, desktops, and related devices.
Before we get into the impact of GST on laptops, let's look at the GST rates for laptops, desktops, and its related devices:-
Regarding the above table, it is clear that for most items like laptops, desktops, and their related devices, the GST applicable is 18%. The only exception to this being- desktop monitors (>32 inches)
GST on laptops
Under the earlier tax regime, the effective tax rate of laptops was between 14%-15%. Presently, under the GST regime, it is 18%, which is slightly higher. As a result, if you contemplate buying a new laptop, be prepared to witness a marginal increase in prices. For a better understanding of the impact of GST on laptops, let's look at the below practical scenario:
Scenario #1: You, as a customer, are interested in buying the DELL Inspiron 15, 3000 series laptop. The price of the laptop before GST is Rs. 35,000. Post GST @18%, your total outflow will be Rs. 41,300. In this scenario, the GST burden on your hand for purchasing the laptop amounts to Rs 6,300.
What is the impact of GST on desktops and their related devices?
The Government levies GST at 18% on desktops and devices like hard drives, pen drives, keyboards, etc. So apart from purchasing a laptop, you will also have to pay GST to purchase its related devices. For a better understanding of the impact of GST, let's look at the below practical scenarios:
Scenario #2: You, as a customer, are interested in buying a LENOVO wireless keyboard. The price of the keyboard before GST is Rs. 1,000. Post GST @18%, your total outflow will be Rs.1,180. In this scenario, the GST burden on your hand for purchasing the device amounts to Rs.180.
Scenario #3: You, as a customer, are interested in buying a DELL desktop monitor, 34 inches. The price of the desktop monitor before GST is Rs. 1,00,000. Post GST @28% (as >32 inches) your total outflow will be Rs.1,28,000. In this scenario, the GST burden on your hand for purchasing the desktop monitor amounts to Rs. 28,000.
Tax Slabs Under GST
There are five tax slabs under GST. Let us understand them one by one.
- 0% (No Tax Slab)- Goods such as fruits and vegetables, fresh meat, jute, eggs, chicken, fish, natural honey, gram flour (besan), flour, salt, bread, rusk, printed books, handloom, Bones and horn cores, newspapers, bangles, and sindoor, have been exempted from GST, that is, no tax is levied on these products.
- 5% Tax Slab- Goods and services priced below Rs. 1000 would invite 5% GST. Such products include packaged food items, skimmed milk, branded paneer, tea, coffee, frozen vegetables, dry fruits such as cashew and raisin, postage or revenue stamps, kerosene, coal, gas, medicines, lifeboats, and insulin.
- 12% Tax Slab- A 12% GST will be levied on products costing more than Rs. 1000 and includes apparel, cheese, ghee, butter, frozen meat and related products, fruit juices, packaged dry fruits, Ayurvedic medicines, namkeen, stationery, sewing machine, umbrella, ketchup and sauces, cutlery, spectacles, fertilisers, diagnostic kits, and board games.
- 18% Tax Slab- The 18% tax slab includes the most number of goods and services under this as it includes products like footwear priced greater than Rs. 500, biscuits, sanitary products, bakery products, preserved vegetables, soups, jams, spreads, speakers, ice-cream, CCTV cameras, printers, steel products, cornflakes, ready to eat foods, mineral water, and aluminium foil.
- 28% Tax Slab- The 28% tax slab is considered to be levied on luxury goods and services, and is applicable to products like chewing gum, savoury snacks such as wafers, shaving cream, deodorants, shampoo, sunscreen, hair dyes, water geyser, ceramic tiles, weighing machine, washing machine, vacuum cleaner, vending machine, automobiles, and five-star hotels.
Recently, the Government has been promoting the Digital India campaign. The fundamental building block for this is laptops, desktops, and their related devices. Currently, GST on these items is 18%, which could hinder the growth of this campaign and the industry as a whole. A reduction in this GST rate to 12% would make laptops cheaper and spur its demand and improve the IT penetration in the country. It is also pertinent to note that it is cheaper to import laptops at the prevailing GST rates rather than manufacture them domestically.
In conclusion, the end customers directly bear the impact of GST on laptops and other devices. As a result, unfavourable GST rates can adversely affect customers and business owners alike. But, business owners can claim an input tax credit for such GST paid since businesses use it for official purposes. Individual customers do not have this option.
We hope that our in-depth post on the impact of GST on laptops has helped you gain a better understanding of this subject. For more such practical content, keep visiting OKCredit. You can also check out our app OKCredit, which can help you manage your business transactions.
|We hope you liked our article. To know more about GST rates, you can visit these linked articles as well:|
|GST on rental income||GST on eCommerce||GST on restaurant bills|
|GST on used vehicles||GST on logistics||GST on medicines|
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Q. What is the GST rate applicable to laptops?
Ans. The Government has fixed the GST rate at 18% for laptops under HSN code 8471.
Q. Does GST make laptops costlier?
Ans. Yes, in the pre-GST era, the VAT rate was 14–15%, but the rate is 18% in the GST era. It has made laptops costlier.
Q. What is the input tax credit?
Ans. An input tax credit is a tax that one already pays while purchasing services or goods. It is available as a deduction from the final tax payable. As a business owner, let's say you buy a laptop for Rs 1,00,000 and pay GST@18% on it, which is 18,000. Subsequently, in the course of your business, you sell goods for Rs 1,50,000, on which GST collected is Rs 27,000. For your final tax payable to the Government, you can reduce the tax paid of Rs 18,000. Therefore, your final output liability would be Rs 9,000(27,000 minus 18,000).