The GST Council initially announced tax rates for various goods and services, including furniture, on May 18, 2017. These rates have undergone subsequent modifications. The ultimate price of wooden furniture is influenced by the costs associated with its raw materials. Therefore, thoroughly understanding how different materials are taxed is essential for accurately assessing the final GST rate applicable to wooden furniture. Below is an updated list of the most current GST rates for wooden furniture in India, which can be a valuable resource.
Items Exempt from Taxation or Subject to Minimal Taxation
Firewood and wood charcoal enjoy tax exemption. Firewood is a vital resource used in rural India for cooking and illumination. Meanwhile, wood charcoal serves many purposes, functioning as a fuel source, a pest repellent, a decolourising agent, and a rust prevention agent.
On the other hand, wood in the form of chips, sawdust, or wood waste falls under a 5% tax bracket according to the GST law. Sawdust finds utility as mulch, an alternative to clay cat litter, or a fuel source. At the same time, wood chips are employed as raw materials for wood pulp production, solid fuel, and in gardening applications for mulch.
Items with a 12% GST Rate
Wooden Utility Items and Pulp
- Wooden items such as drums, wooden boxes, crates, walking stick components, umbrellas, and tool handles are subject to a 12% GST rate. These versatile products find widespread use in construction projects and as essential containers and tools.
- Wood and bamboo pulp are also taxed at 12%. Bamboo pulp is indispensable for producing various paper products, including printouts, receipts, envelopes, tissues, paper cups, and napkins. Wood pulp, another environmentally friendly material, performs similarly in crafting paper, tissue, board, and speciality paper.
Particle Boards for Construction and Furniture
Specific particle boards, crucial in construction and furniture manufacturing, are categorised under the 12% GST rate. These boards are utilised in various applications, including construction, flat-pack furniture, interior cabinets, work surfaces, wall panels, and floor panels. The boards encompass a range of types such as Glass-fiber Reinforced Gypsum Board, Cement Bonded Particle Board, Bagasse Board, Jute Particle Board, Rice Husk Particle Board, Particle/fiberboard made from agricultural crop residues, Sisal-fiber Boards, and Cotton Stalk Particle Board.
Wooden Furniture and Decorations
Wooden furniture and decorations intended for kitchenware or tableware, except those attracting a 28% GST rate as per GST notifications, also fall under the 12% GST category. These items constitute a significant portion of the offerings in the furnishings and decorative items segment, commonly sought after by consumers when shopping for furniture.
Items Subject to 18% GST
Wood Pulp By-products
Residual lye derived from wood pulp manufacturing, whether in concentrated form or otherwise, is classified under the 18% GST bracket. This includes de-sugared lye. Additionally, chemically treated residue, such as lignin sulfonates (excluding tall oil), is subjected to the same tax rate.
Wood Derivatives
A range of wood-related products, including wood tar, wood tar oils, wood naphtha (commonly known as methanol), vegetable pitch, brewers’ pitch, and preparations formulated based on resin acids, resin, or wood creosote and vegetable pitch, are taxed at 18%. Wood tar is frequently used as construction caulking material to seal off leaks and joints. Wood naphtha, also referred to as methanol or wood alcohol, plays a vital role as a component in paint thinners and serves as a foundational material for various construction products.
Items Subject to 28% GST
Wood-Like Materials
Plywood, fiberboard, laminated wood, and other materials with a wood-like appearance or characteristics are placed in the highest tax bracket, at 28%. Plywood is a commonly used construction material for partitions, flooring, ceilings, and sheathing and for indoor and outdoor decorative purposes. Laminated wood suits beams, pillars, ceilings, panels, stairs, and cladding.
Cane Furniture
Cane furniture, known for its durability of up to 10 to 15 years and often used outdoors, also incurs heavy taxation at 28%. Despite the tax rate, cane furniture is popular due to its body-friendly and cooling properties, making it an ideal option for patios.
Frames for Art and Decor
Wooden frames designed for photographs, paintings, mirrors, or similar objects are classified in the 28% GST bracket. For art enthusiasts, the choice of frames becomes a significant consideration.
Builders’ Joinery and Carpentry
Items included in builders’ joinery and carpentry of wood, such as cellular wood panels, shingles, assembled flooring panels, and shakes, are also subject to the 28% GST rate. These components are crucial during construction and essential in assembling various wooden furniture pieces.
Other Wooden Articles
The 28% GST category for wooden furniture extends to wood paving blocks, densified wood articles not categorised elsewhere, and components of domestic decorative pieces used as tableware and kitchenware.
HSN Code for Wooden Furniture
HSN codes, comprising six digits, are assigned to items to facilitate their precise classification. These codes are globally recognised and aid in the organised categorisation of goods. In the case of wooden furniture, the HSN codes typically begin with the number 44. For instance, furniture used in bedrooms is categorised under HSN code 940350. It’s worth noting that the GST tax rates for wooden furniture are divided into five categories: nil, 5%, 12%, 18%, and 28%.
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Conclusion
The Goods and Services Tax (GST) rates for wood and wooden furniture are structured in a way that encompasses various categories. The GST Council introduced these rates in 2017, and they have since undergone modifications to ensure a comprehensive and standardised taxation system. These rates consider the type of wood and wood-related products, ranging from exempt or minimally taxed items to those subjected to higher tax rates.
Understanding the tax rates for wood and wooden furniture is crucial for consumers and manufacturers. It enables them to make informed purchase decisions, helps businesses plan their pricing strategies, and ensures a fair and efficient tax collection system.
Frequently Asked Questions(FAQs)
1. Is GST Levied on Surgical or Medical Furniture?
Yes, GST is applicable at a rate of 18% on dental, surgical, medical, or veterinary furniture, including items like hospital beds, operating tables, and examination tables.
2. Is Input Tax Credit (ITC) Applicable to Furniture?
Input Tax Credit is not available for furniture used in constructing “immovable property” as defined under section 17(5) of the GST Act. This restriction applies to items like walls, ceilings, floors, etc.
However, in most standard cases, furniture is considered movable, meaning it can be easily shifted from one place to another. Examples of such movable furniture include sofas, chairs, tables, etc. In these cases, ITC is permitted and can be claimed.
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