Paint HSN Code and GST Rate

The Goods and Services Tax (GST) rate on paints has undergone significant changes over the years. Initially set at 28%, the GST rate for paints was later reduced to 18% in 2018. This reduction has had a considerable impact on the paint industry, affecting manufacturers, suppliers, and consumers alike. 

Read on to know all about the impact of GST on paints, including the GST rate and HSN code for paints, and ITC availability. 

Taxability of paints and related goods in the pre-GST era

In the pre-GST era, paints and related goods were subject to multiple taxes, including Excise Duty and Value Added Tax (VAT). The tax structure varied depending on the type of tax and the state in which the transaction occurred.

For instance, excise duty, which accounted for 12.5%, was levied on the manufacture of paints. On sales, VAT rates ranged from 12.5 to 14.5%, depending on the state. 

Under the new regime, the GST on paints was taxed at a flat rate of 28%. This rate was comparable to the cumulative effect of the pre-GST taxes. However, taking into consideration the demands from the paint industry, this rate was later reduced to 18%.

Paint GST rate and HSN code

In the 28th GST council meeting, a decision was made to reduce the paint GST rate from 28% to a lower rate of 18%. 

Here is a detailed tabular representation the GST rates and HSN codes for paint and other related products:

Impact of GST on the paint industry in India

The reduction of GST rates from 28% to 18% in the paint industry has had a positive impact on the paint industry. It provided significant relief to manufacturers and customers both and resulted in cost savings. 

Can input tax credit be taken of GST paid on paint?

Input Tax Credit (ITC) is a mechanism that allows businesses to offset the taxes they have paid on inputs (purchases) against the taxes they pay on outputs (sales).

The availability of ITC on GST on paints depends on the capitalisation or revenue treatment of the expense. For instance, if the expense is capitalised and considered to be a part of construction activity for an immovable property, then the ITC of the GST paid for paint will not be available to the extent of capitalisation. 

However, if the expense is charged to revenue or used for repair of existing furniture and fixtures, ITC of the GST paid on paints would be available following the provisions of Section 16 of the CGST Act, 2017.

Conclusion

Understanding the GST rate and HSN code for paints is crucial for businesses operating in the paint or construction industry. By adhering to the correct tax rates and accurately identifying the appropriate HSN codes, businesses can ensure compliance with tax regulations and streamline their operations.