GST on Air Conditioners in India

Working out the GST on air conditioners

Air conditioners are taxed at a flat 18% across every type and tonnage, so the arithmetic is straightforward. Multiply the taxable value by 18 percent to get the GST, then add it to the base price for the total.

• For an intra-state sale, the 18% splits into 9% CGST and 9% SGST.
• For an inter-state sale, a single 18% IGST applies instead.
• The calculator on this page is pre-set to the 18% rate and handles both cases.

A worked example

Suppose an air conditioner has a taxable value of ₹40,000 before tax. Applying 18% GST works out as follows.

The AC rate cut from 28% to 18%

Air conditioners were long taxed as a luxury item at 28%. GST 2.0 changed that: from 22 September 2025 all air conditioners moved to 18% under HSN 8415, treating them as a standard appliance. The cut applies across every type, and no compensation cess applies any more. The table covers the range.

Installation is part of the taxable value

When you buy an AC with installation, the two are bundled as a composite supply and 18% GST applies to the total. On an AC priced at 40,000 with 5,000 installation, GST is charged on 45,000, giving 8,100. Even where installation is billed separately, it attracts 18% too, so the outcome is the same. Factor the installation into the taxable value when working out the final cost.

The saving from the rate cut

On a 40,000 AC, the old 28% rate added 11,200. The new 18% rate adds 7,200, a saving of 4,000 on a single unit, assuming the dealer passes on the cut. Imported ACs still carry a basic customs duty on top of the 18% IGST, which keeps premium international brands more expensive than domestic models.

Input tax credit on a business AC

A GST-registered business can claim input tax credit on an AC bought for commercial use, such as a hotel cooling guest rooms or an office. A useful point: because an AC is movable and can be uninstalled and shifted, it is treated as plant and machinery rather than immovable property, so the Section 17(5) block on immovable-property credit does not apply. An AC bought for personal home use does not qualify for ITC.

Old stock and the rate change

Units manufactured before 22 September 2025 were not required to be recalled or re-labelled, so some older stock may still carry a printed MRP calculated at the earlier 28% rate. The GST charged on your invoice should reflect the current 18% regardless of what the box says. If a retailer bills 28% on a purchase made now, that is simply wrong. Check the tax line on the invoice rather than relying on the sticker.

Exchange offers and AMC

As with phones, an exchange offer does not reduce the taxable value: if a unit is listed at ₹45,000 and you trade in an old AC to pay ₹40,000, GST is charged on the full ₹45,000, because the traded-in unit is part of the consideration. An annual maintenance contract is a separate service taxed at 18%, as is a paid extended warranty. Gas refilling and servicing are also 18% services.

Buying online and imports

The 18% rate is identical online and in store, and the listed price is normally GST-inclusive. On an inter-state order it appears as IGST. An imported AC attracts 18% IGST calculated on the assessable value plus basic customs duty, which is why imported premium brands stay relatively expensive despite the rate cut. A registered importer can claim that IGST as input tax credit.

Frequently asked questions