GST on Battery — Updated Tax Rates & HSN Code Explained

Mayank purchased a battery that is used as an inverter battery. He had bought this battery a third time before, and it cost him ₹10,000 (Excluding GST). He looked into the tax portion of the expense to calculate how much GST he paid.

In India, batteries fall under 28% GST (which is made of lead acid). So, he paid ₹12,800, ₹2,800 was GST (since ₹12,800 includes GST). Here’s how it breaks down:

There was a tax amount of ₹2,800 for Mayank. He understands that 28% GST (for only lead acid batteries) is a cost added to the final price. If taxes on batteries were lower, their prices would drop. 

GST on Batteries – Different Categories of Battery with Price and Applicable GST Rate

Mayank had to get a replacement battery for his home inverter. He wondered why every battery is subject to a different GST. His friend told him that whether GST is payable for a battery depends on its type and purpose. Here’s a simple breakdown of GST rates for different batteries:

GST Rates on Different Types of Batteries:
 

Key Points
 

• Inverters and mobile batteries are subject to a 28% GST.
   
• Car batteries have a higher 28% GST because they are considered automobile parts.
   
• Solar batteries get a lower 5% GST to encourage renewable energy use.
   
• Lithium-ion batteries (used in EVs and gadgets) also have 18% GST.

Mayank was surprised when his inverter battery had the same rate of 28% GST as his car battery. He recognises that GST for batteries depends on what the battery will be used for.

HSN Codes for Batteries – Mayank’s Guide to Understanding Battery Taxes

Mayank was buying a new inverter battery for his home and noticed a strange number called "HSN Code" on the bill. His seller explained that this code helps classify products for GST. Mayank researched different battery types and their HSN codes.

Here’s a simple breakdown of HSN codes for common batteries and their GST rates:

HSN Codes & GST Rates for Different Batteries:
 

Key Points
 

• HSN Code (Harmonised System Nomenclature) is a 6-8 digit number used to classify goods for taxation.
   
• Lead-acid batteries for vehicles (like cars) fall under HSN 8507 and attract 18% GST.
   
• Inverter & solar batteries have different GST rates (18% vs 5%) even if they look similar.
   
• Lithium batteries (used in phones and electric vehicles) are subject to 18% GST under HSN 8507.
   
• Dry cell batteries (like AA/AAA) have a different HSN code (8506) but the same 18% GST.

Mayank learned that HSN codes help the government apply the correct GST rate. Now, he checks the code before buying to avoid confusion.

Types of Batteries and Their GST Rates - Mayank's Simple Guide

Mayank runs a small electronics repair shop and often gets confused about which GST rate applies to the different batteries he sells. To make it easier, he made this simple reference table:

Battery Types and GST Rates:
 

Important Points Mayank Learned:
 

• Car batteries have the highest GST at 28% because they're considered vehicle parts.
   
• Solar batteries are eligible for a 5% GST rate, promoting green energy.
   
• Most other batteries, like mobile and lithium-ion, have an 18% GST.
   
• The same physical battery might have different GST rates based on its use.
   
• Always check the exact battery type before applying GST.

Now, Mayank displays the information printed on this table where customers get their bills. When a customer wants to understand why batteries have different prices, he can describe the GST differences. By utilising market research, he no longer makes billing mistakes and can confidently respond to customer questions.

Impact of GST on the Battery Industry

Mayank is the owner of a battery shop and notes how the introduction of GST affected the business. Here are the points that he observed:

• Before GST, different states had different tax rates, making pricing confusing. Now, one national GST rate applies to each battery type.
   
• Car batteries became more expensive due to 28% GST, pushing some customers to repair old batteries instead of buying new ones.
   
• Solar batteries got cheaper with 5% GST, helping Mayank sell more to homes using solar power.
   
• Inverter and mobile batteries stayed steady at 18% GST, but input costs dropped because GST on raw materials became simpler.
   
• Small businesses like Mayank’s benefit from input tax credit, letting them claim back GST paid on purchases.
   
• Online sellers now compete fairly because GST rules are the same across India.

A price increase was necessary for Mayank because of GST, but overall, his business ran better after that. People purchase car batteries at a higher price, but solar ones are cheaper, and Mayank finds it more convenient to bill since tax rates do not vary.

Input Tax Credit (ITC) on Batteries

Recently, Mayank, who has a battery shop, found out about what Input Tax Credit (ITC) means. This is the way it assists his business:

• When Mayank buys batteries from a supplier, he pays GST on the purchase.
   
• Later, when he sells those batteries to customers, he collects GST again.
   
• ITC allows Mayank to deduct the GST he has already paid on his purchases from the GST he collects on sales.
   
• For example, if Mayank paid ₹1,800 GST on a battery purchase and collected ₹2,500 GST on sales, he only pays ₹700 (₹2,500 - ₹1,800) to the government.
   
• This prevents double taxation and reduces his final tax burden.
   
• ITC applies only if his supplier has proper GST invoices and files returns correctly.
   
• Mayank must file GST returns on time to claim ITC without issues.

It’s thanks to ITC that Mayank pays less tax and can set reasonable prices for batteries.

Top 10 FAQs on GST for Batteries

1. What is the GST rate on car batteries?

Car batteries attract 28% GST because they are considered automobile parts. This is higher than other batteries, making them more expensive for buyers.

2. What GST rate applies to inverter batteries?

Inverter batteries for homes or offices have 28% GST. This rate applies to most lead-acid batteries used in UPS systems.

3. Is GST different for solar batteries?

Yes, solar batteries have a lower 5% GST to encourage renewable energy use. This makes them more affordable compared to regular inverter batteries.

4. Do mobile phone batteries have GST?

Yes, mobile batteries have 18% GST, just like other lithium-ion or lithium-polymer batteries used in electronics.

5. Can I claim an Input Tax Credit (ITC) on battery purchases?

Yes, if you are a registered business (like a shop or distributor), you can claim ITC on GST paid for batteries you resell or use for business purposes.

6. Why do car batteries have a higher GST than inverter batteries?

The government classifies car batteries as automobile parts, which generally have the same tax (28% GST), if we talk about Cars and Inverter batteries.

7. Are there any GST exemptions for batteries?

No, all batteries attract GST, but rates vary. Small dry-cell batteries (like AA/AAA) have 18% GST, while solar batteries get a lower 5% rate.

8. How does GST affect battery prices for customers?

GST increases the final price, but rates differ.

9. Do I need an HSN code for battery billing?

Yes, sellers must mention the HSN code (like 8507 for lead-acid batteries) on invoices to ensure the correct GST application.

10. What happens if a seller charges the wrong GST on batteries?

Charging incorrect GST is illegal. Buyers can report such sellers, and penalties may apply. Always check your bill for the GST rate.

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LoansJagat Team

‘Simplify Finance for Everyone.’ This is the common goal of our team, as we try to explain any topic with relatable examples. From personal to business finance, managing EMIs to becoming debt-free, we do extensive research on each and every parameter, so you don’t have to. Scroll up and have a look at what 15+ years of experience in the BFSI sector looks like.