Ever since the Goods and Service Tax was introduced, taxation has become simpler. Earlier, when consumers were required to pay multi-tiered taxes on goods they purchased, the GST subsumed all of them into one tax - thus significantly reducing the costs in the entire value chain.
Where goods such as laptops are concerned, GST is levied at 18% - which is all of the tax you need to pay for laptops now, as compared to 14-15% of VAT which was levied earlier in addition to a collection of other taxes. Things being such, laptops may have become just a tad more affordable today than they were before, even though the tax rates seem to be a little higher. GST alone replaces many other taxes, making overall cost low relatively.
Types of GST Applicable to Laptops and its Paraphernalia
On electronic items such as laptops, desktops and related accessories, three types of goods and service taxes are liable to be paid upon purchase:
- The CGST, or Central Goods and Service Tax, is equivalent to 9% of the marked retail price of the product. This tax goes to the Centre.
- The SGST, or State Goods and Service tax, is applicable on laptops, desktops and accessories at the rate of 9% of the marked retail price of the product. This tax goes to the State.
- The third kind of goods and service tax is applicable when products cross interstate boundaries after purchase - such as in e-commerce orders. The IGST, or Interstate Goods and Service Tax, is applicable when the items purchased belong to a retailer operating out of a different State than the purchaser. It is levied at the rate of 18% on the marked retail price.
If you are purchasing your laptops, desktops, or accessories from a local retailer, you are required to pay GST at the rate of (9% CGST + 9% SGST) = 18% GST total. If you have ordered a laptop online and it is being shipped interstate, GST will be 18%.
What is GST Compensation Cess?
The basis on which GST was founded was to subsume and supersede all other indirect taxes that were being levied on the consumers of the country. As such, when the Goods and Services Tax was announced, it caused the State governments to concede all their powers to collect indirect taxes levied on goods and services to the Centre. When this happened, the State governments stood to lose a huge amount of revenue.
In order to compensate the States for the revenue lost due to the implementation of GST, the GST Compensation Cess was announced by GST (Compensation to States) Act 2017. The GST Compensation Cess is applicable to be collected for five years from the announcement of GST, or such period as stipulated by GST Council.
If you are a taxpayer who is engaged in supplying goods or services as stipulated applicable for the Cess, (excluding exporters and composition taxpayers), you are eligible to collect GST Compensation Cess.
Since this Cess is a consumer-focused levy, it may mean that manufacture-based States could incur some losses.
How is GST Rate Calculated?
The amount of goods and service tax to be levied is determined by the GST Council. The members of the table put forth recommendations that are gleaned from tax collection metrics, projections, market dynamics, etc. of a particular class of products. Based on these recommendations, a tax rate is fixed for a particular class of goods or services.
Periodic revisions to tax rates are also put forth sometimes by the council, in order to ensure affordability of the goods and services in question. The government is currently considering lowering the rates of GST on various goods and services, owing to an overwhelming tax collection that has gone beyond what was projected.
GST rates thus keep changing based on the tax collection metrics and market dynamics.
What is HSN Code, and How Does it Work?
HSN is the acronym for Harmonized System of Nomenclature. It is basically a 6-digit code that works as a universal identifier for commodities - whether national or international. In order for taxation to be understood universally, and for the purpose of organized, systematic classification of the same, HSN codes were introduced in 1988 by World Customs Organization (WCO). They have been in use in India as well for quite some time now, for commodities that are applicable for Customs and Central Excise.
The same HSN codes are used in the GST practice as well. The purpose of these codes is to give the taxpayer (or the GST professional) a unique code for each product to make the process of filing taxes simpler. Instead of having to upload every single detail of a commodity liable for tax, you can simply enter its HSN code and proceed with the remaining formalities.
HSN codes are mostly used by manufacturers, exporters and importers, traders and dealers. Dealers who have an annual turnover lesser than ₹1.5 crores need not use HSN codes to classify their commodities. Those who have a turnover between ₹1.5 crore and ₹5 crores use an HSN code of two digits to identify their commodities. Those above ₹5 crores adopt the standard, global 6-digit HSN codes.
While HSN codes are used to classify and identify products, a similar system exists for classification as well: the SAC. SAC stands for Services Accounting Code and is similar to HSN in concept.
HSN Code for Computers, Laptops and Other Accessories
For all the items that surround computers and laptops, there are unique HSN codes that work as identifiers and classifiers. Below is a table that lists the HSN codes for all these items.
|Storage units:||8471 70|
|Floppy disc drives||8471 70 10|
|Hard disc drives||8471 70 20|
|Removable or exchangeable disc drives||8471 70 30|
|Magnetic tape drives||8471 70 40|
|Cartridge tape drive||8471 70 50|
|CD-ROM drive||8471 70 60|
|Digital video disc drive||8471 70 70|
|Other||8471 70 90|
|Other units of automatic data processing machines||8471 80 00|
|Other||8471 90 00|
|Graphic printer||8471 60 24|
|Plotter||8471 60 25|
|Other||8471 60 29|
|Keyboard||8471 60 40|
|Scanners||8471 60 50|
|Mouse||8471 60 60|
|Other||8471 60 90|
|Comprising in the same housing at least a central processing unit and an input and output unit, whether or not combined||8471 41|
|Microcomputer||8471 41 10|
|Large or mainframe computer||8471 41 20|
|Other||8471 41 90|
|Presented in the form of systems||8471 49 00|
|Processing units other than those of sub-headings 8471 41 or 8471 49, whether or not containing in the same housing one or two of the following types of unit: storage units, input units, output units||8471 50 00|
|Input or output units, whether or not containing storage units in the same housing||8471 60|
|Combined input or output units||8471 60 10|
|Automatic data processing machines and nits thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, not specified or included elsewhere||8471|
|Portable digital automatic data processing machines, weighing not more than 10 kg. Consisting of at least a central processing unit, a keyboard and a display||8471 30|
|Personal computer||8471 30 10|
|Other||8471 30 90|
How was Tax Levied on Laptops in the Pre-GST Era?
GST is a recent effort of the government to check corruption and non-payment of taxes. It was introduced in July 2017 and absorbed various indirect taxes on the same commodity at various levels. As such, it is much simpler than the tax regimen practised earlier, before the pre-GST era.
Before July 2017, consumers who wanted to purchase laptops were required to pay a VAT - Value Added Tax - to the government. It was to the tune of 14% to 15% and depended on the State where the commodity was being bought. The value of VAT levied on the same commodity was different in each State.
Frequently Asked Questions
- What is the GST for Laptops?
Laptops incur a GST of 18%, out of which 9% is CGST and 9% is SGST.
- How can I save GST on a PC / Laptop?
In order to save GST on a PC or laptop, you must purchase from a GST-registered retailer and get a debit note or tax invoice from them. You can then file for input credits under GST law and save on the tax.
- Will computers be less expensive after GST?
Since GST is 18%, which is 3% to 4% higher than VAT that was levied earlier, it is expected that these goods will be costlier now. However, revisions to GST are introduced every once in a while, and GST rates may reduce in the future.
- Can I claim input credit on GST on a laptop?
Yes, if you purchase from a GST-registered retailer and receive a debit note/tax invoice. You can file for input credits.
How Deskera Can Guide You?
Discover how you can combine accounting, finances, inventory, and much more, under one roof with Deskera Books. It's now easier than ever to manage your Journal entries and billings with Deskera. The remarkable features, such as adding products, services, and inventory, will all be available to you from one place.
Experience the ease of implementation of the tool and try it out to get a new perspective on your accounting system.
With the guiding and informative videos on how to manage and set up India GST, you can learn about and familiarize yourself with the process in just a few minutes.
Deskera Books can handle every aspect of the organization, including inviting colleagues and accountants.
Summing it Up
The Goods and Service Tax is a revolutionary initiative by the GoI that has drastically simplified the taxation and filing process across the country. By moving things online to the GST portal, it has become even more accessible and easier to understand the filing process.
Needless to say, going about claiming GST credits for purchasing laptops, desktops and paraphernalia isn't a complicated or accountancy-heavy task any longer. You can easily handle the filing yourself, provided you have the invoice details from a registered retailer. While certain commodities did end up becoming dearer than before, the GST does keep evolving with trends and is likely to go down in the future.