GST on Crackers: Applicability, HSN Code & GST Rate in India

We associate crackers with celebrations, be it Diwali or marriage ceremonies. However, according to industry terminology, they belong to a broad product category of pyrotechnic articles, which also include our everyday safety matchboxes. The GST Council categories these articles based on the Harmonized System of Nomenclature, or HSN codes. 

This article discusses GST for crackers in India, along with other pyrotechnic articles, and the HSN code for crackers in GST. 

GST on crackers

Before 2017, firecrackers and other pyrotechnic article manufacturers used to pay value-added tax, or VAT, at a rate of 14.5%. Since the introduction, the GST Council has levied different GST rates depending on product categories. The standard GST rates are 28%, 18%, 12%, 5%, and 0%. 

In 2017, crackers and similar firework articles were categorised under the 28% GST rate. This caused business losses for manufacturers and traders. So, in the 23rd GST Council meeting which was held on 10th November 2017, the rate was reduced to 18% from 28%. The meeting.  

As of 2023-24, pyrotechnic articles are subject to 18% GST, which is 3.5% higher than the previously levied VAT. 

Example:

A Sivakasi-based firecracker manufacturer prices a pack of Anar (cracker) at ₹300. Including the GST, the cost of the pack for consumers will be {(₹300*18%) + ₹300} or ₹354. Before 2017, the same pack would have a cost of ₹343.5. 

Applicability of GST on crackers

The final burden of indirect taxes on the price of a good may depend on the tax structure applicable to raw materials used in its production, packaging and transportation. 

In the pre-GST era, multiple tax structures of VAT, excise duties, and services taxes at different rates often caused price inflation for the final good at the consumer's end. These rates also varied with states. 

However, input tax credits and a centralised tax structure under the GST regime have resolved these problems for firecracker manufacturers and traders.

For example, the manufacturing of firecrackers requires multiple inputs, such as:

• Propellent powder 
• Denominating cap 
• Safety fuse 
• Packing paper 
• Packing box 
• Paper and cardboard 
• Plastic wrapper
• Flash powder 
• Cordite

Individual GST rates apply to firecrackers' raw materials, and businesses can claim input tax credits. 

• The GST Council categorises pyrotechnic raw materials at a uniform GST rate of 18%. 
• The GST rate on a cardboard box is also 18%. 
• The same rate of 18% is also applicable to plastic packaging materials. 

Crackers HSN code

The Harmonized System of Nomenclature, or HSN codes, of different pyrotechnic articles are: 

Reference - https://cbic-gst.gov.in/gst-goods-services-rates.html