GST on Pencil – Tax Rate, HSN Code & Exemptions

Goods and Services Tax (GST) is a unified tax system in India, applied on the supply of goods and services. Pencils, basic stationery items, attract a lower GST rate to support affordability, especially in the education sector.

For example, Riya runs a small stationery shop in Jaipur. She purchases a box of pencils from a wholesaler at ₹200 and sells them for ₹240. Under GST, she pays tax on both purchase and sale, but can claim input tax credit (ITC) on the tax she paid during purchase.

Riya collects ₹28.8 as GST from the customer, but has already paid ₹24 as input tax. Hence, she only needs to pay ₹4.8 to the government, demonstrating the benefit of input tax credit.

GST On Pencil

Pencils are essential stationery items that students, professionals, and artists use. Under India's Goods and Services Tax (GST) regime, various types of pencils and their related accessories are subject to different GST rates, depending on their category and usage.

Below is a table showing different categories of pencils, their estimated prices, and the applicable GST rates:

HSN Codes for Pencil

The Goods and Services Tax (GST) system uses HSN codes to classify different types of pencil products for proper taxation. Each type, whether it's a wooden pencil, pencil lead, or crayon, has a specific code. This helps in correct billing, tax filing, and compliance. The table below lists various pencil-related products with their respective HSN codes and descriptions.

Impact of GST on Pencils 

HSN (Harmonised System of Nomenclature) Codes apply to different types of pencils and related products. HSN codes help in systematic classification for GST purposes and ensure consistent tax rates across the country. Each type of pencil or accessory has a specific HSN code based on its use and material.

Read More – GST on Pen

GST stands for Goods and Services Tax. It is a tax added to the price of many things we buy, including pencils.

What is the impact?

Example:

If a pencil costs ₹10, then with 12% GST, it becomes:

₹10 + ₹1.20 (12% GST) = ₹11.20

So the pencil costs more than before, but the tax system is now the same all over India. And the money collected helps the government build schools, roads, and hospitals.

Input Tax Credit on Pencils

Input Tax Credit (ITC) under GST lets businesses reduce the tax they have already paid on purchases from the tax they collect on sales. For example, a shopkeeper buys pencils at ₹10 each and pays 12% GST, which is ₹1.20. He later sells the pencil for ₹12 and collects 12% GST, which is ₹1.44. 

The shopkeeper has already paid ₹1.20 as GST when buying the pencil. So, he can claim this as input tax credit. He only needs to pay the remaining ₹0.24 (₹1.44 – ₹1.20) to the government. This system reduces double taxation and ensures GST is charged only on the added value.

Conclusion

The implementation of GST on pencils has brought uniformity in taxation across India. While it has slightly increased the price for consumers due to the 12% tax rate, it has also simplified the tax process for manufacturers and retailers. The availability of input tax credit ensures that businesses are not taxed multiple times on the same product. 

Also Read - GST on Paper

Moreover, it has reduced the cascading effect of multiple indirect taxes that previously applied at various stages of production and sale. With clearly defined HSN codes and applicable rates, the classification and billing of pencils have become more structured and efficient. 

FAQ’s

1. What is the GST rate on standard wooden pencils?
The GST rate on standard wooden pencils is 12%.

2. Is GST applicable to slate pencils?
No, slate pencils attract 0% GST, meaning they are tax-free.

3. Can shopkeepers claim input tax credit on pencils?
Yes, shopkeepers can claim input tax credit on the GST they pay when purchasing pencils.

4. Are mechanical pencils taxed under GST?
Yes, mechanical or propelling pencils also attract 12% GST.

5. Why did pencil prices increase after GST?
Prices increased slightly due to the uniform 12% GST applied nationwide.
 

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