GST on Laptops and Accessories and the Applicable HSN Codes

In 2017, all the indirect taxes in the country were replaced by Goods and Services Tax. With the implementation of GST, indirect tax filing has become a simple and straightforward task. Everything has switched to online mode, and slowly, every procedure is going paperless. 

In this article, we will provide you with information about GST rates and HSN codes applicable to laptops and accessories. 

Did you know? 

The GST rates globally vary from 1.5% to 27%. India has implemented GST in four stages, divided according to the goods category. The essential category of products has 5% GST and 28% GST on luxury and Sin goods. The 12% and 18% GST are applicable on most daily goods and commodities. 

GST Rates on Laptops 

During the time of the modification of taxation laws, the prices of several things were either increased or decreased, and in some cases, they remained constant. In the case of laptops and accessories, the prices significantly increased when compared to the pre-GST era.

The GST rate currently applicable on laptops and computers is 18% which is decided by the GST council of India. 

Earlier, VAT was imposed on computers that had different values in different states. 

How is GST Rates Calculated?

The GST rates are variable and changed according to the current economic scenarios and financial experts’ recommendations after the GST Council’s approval. The GST Council evaluates and revises the GST rates to regulate and optimise the taxation process.

Also Read: GST Unique Identification Number

How Has GST Affected the Computer Market?

Considering the pre-GST era, you had to pay around 14-15% VAT on laptops and computer devices. But after the introduction of GST, you have to pay 18% GST on these products, thus increasing the price. If you are considering buying a new laptop device, the government charges you a little extra in comparison to pre-GST. 

Here is the list of GST rates on various laptops and some accessories –

Types of GST Applicable to Laptops, Computers, and Accessories

The 18% GST applicable on computer devices comprises three different taxes. They are actually three different sub-types of GST. They are 

1. CGST – Central Goods and Services Tax
2. SGST – State Goods and Services Tax
3. IGST – Interstate Goods and Services Tax 

The SGST and CGST are divided in a 50:50 ratio in the GST slab, i.e. 9% CGST and 9% SGST. 

For example, if the total amount of GST on a laptop is ₹2000, then CGST takes up ₹1000, and the remaining ₹1000 is for SGST. However, in the case of interstate trading of goods, 18% IGST is also applicable to these products.

Also Read: Know About Inverted Duty Structure under GST

How is GST Calculated on Laptops?

GST on laptops can be calculated with the help of the following formula. This formula will help you calculate the GST amount and net Price of laptops and any product you wish to calculate. 

Amount of GST = original cost of the product x the % of GST applicable on the product

Net price/MRP of the product = original cost + the GST amount. 

For example, let us consider a laptop having an original cost of ₹1,00,000. And as we know, the applicable GST rate on laptops is 18%. We can easily calculate the GST amount with the help of the formula mentioned above. 

GST amount = 18% x ₹1,00,000 = ₹18,000

Net Price of the laptop = original cost optimising = ₹1,00,000 + ₹18,000 = ₹1,18,000.

As you can see, the price of products increases significantly once GST rates are applied to them. 

Understanding the HSN Code 

HSN stands for ‘Harmonized System of Nomenclature. This system is accepted worldwide for the nomenclature and classification of goods. 

The HSN code is a six-digit universal number that segregates more than 5000 products of different categories and is accepted in every corner of the world. They have been assigned to products to decide the GST rate for the respective product. To get info about the GST rates of any products, you must look up their HSN code. 

HSN Code for Laptop and Computer Devices

Laptops and computers are covered under Chapter 84 of HSN. These devices are listed as ‘automatic data processing units and machines. The chapter includes HSN codes for laptops, desktop computers, microcomputers, and related accessories.

It has listed certain criteria for a device to qualify as data processing units and machines.

1. A device that can store data processing programs and data is necessary for the execution of the program
2. Devices containing software programs can be designed according to the user’s needs
3. A device that can perform arithmetical operations using processing programs on the user’s request.
4. A device that can perform logical tasks and conduct modification processes without any kind of human involvement

According to the above-mentioned criteria, devices like laptops, computers, and accessories like keyboards, mice, USB drives, etc. fall into this category.

Here is the list of HSN codes for a few devices –

Why is the HSN Code so Important?

HSN codes are primarily used for the segregation of products worldwide. Other than that they are also useful in maintaining and optimizing the taxation process throughout the world.

1. Brings Uniformity to the Taxation Process  

International trade isn’t based on any kind of set of laws proposed by any government. There are so many countries involved in the trading process at multiple stages. They have minimized the chances for any kind of confusion and misinterpretations in the trading and taxation process. 

Since more than 200 countries mutually agree on HSN codes, they have surely bought uniformity and unity among the nations at least in the terms of taxation and trading.

Also Read: Know About GST Audit Checklist FY 2022-23

2. Simplified Classification of Products 

HSN codes are used to classify more than 98% of the different commodities in the trading space. The HSN codes are standardized and the same in all the countries for almost all goods. This makes the classification of the products more simplified than before. It has made the calculation of indirect taxes (GST in India) much easier.

How Has the HSN Code System Benefitted India?

The HSN code system was bought into practice after the implementation of Goods and Services Tax (GST) in India. In the pre-GST era, it was only used by the Central Excise and Customs Regime of India. 

India applied the HSN code system with a few modifications like adding two more digits at the end to classify local commodities and products. This is a standard modification and is permitted by the World Customs Organisation. 

In a country like India, there are many ways in which one can commit tax fraud without getting caught. HSN codes have made the process more transparent, helped to minimise them, and helped the system catch such unconstitutional elements. 

HSN codes have helped the government to put up local products like dairy products and clothing on an international scale and help them grow their business.

The HSN Code System and GST Filing 

With the implementation of GST in India, indirect tax filings have switched to systematic and error-free online systems. HSN codes have played a big role in achieving the aim of an accurate and hassle-free taxation process. 

The government came up with different ways of applying the HSN code system in GST filings.

• Taxpayers running a business with a turnover of ₹1.5 crores or less are exempted from using HSN coed under the Composition Scheme. 
• Taxpayers running a business with a turnover of more than ₹1.5 crores but less than ₹5 crores are required to use the 2-digit HSN code for services and goods. 
• Taxpayers with a turnover of more than ₹5 crores are required to mention the first 4-digits of the HSN code. 
• For the business groups involved in international trading, both export and import, it is mandatory for them to use all the 8-digits of the HSN codes.

Also Read: Difference Between VAT and GST

Conclusion:

The slogan ‘One Nation, One Tax’ given by the Indian government has definitely achieved its aim of unifying taxes and eliminating all the different taxes applicable at different levels like VAT, Entertainment Tax, Service Tax, etc. and has bought them under one roof that we call Goods and Services Tax (GST). Even though the GST system might have hiked the prices of many products by a considerable margin, it has brought transparency to taxation and thus played a key role in establishing a streamlined tax system that functions smoothly. GST system has benefited the common man as well by removing the unwanted taxes which were earlier applicable on daily-requirement products. HSN code system has played an important role in implementing the GST system properly and has helped to make the classification and segregation of goods to apply rates much easier and simplified. We hope that this article has helped to find out the GST rates applicable on laptop and computer accessories and helped you to understand HSN codes and their importance better.

 Follow Legal Tree for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.