[ecis2016.org] If you are in the business of producing furniture, you will be required to pay GST on an individual basis for each material that you acquire.
The Goods and Services Tax (GST) tax system began operating on July 1, 2017, and is governed by the GST Council of India. It introduces a significant amount of change to the indirect tax structure. This central tax is charged on almost all items and services in the nation including furniture, with a few notable exceptions.
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Wooden furniture GST rate applicable
If you are in the business of producing furniture, you will be required to pay GST on an individual basis for each material that you acquire. Under the Goods and Services Tax (GST) system, the relevant tax rate for completed wooden furniture is 12%. Plywood is often used in the construction of wooden furniture. When it comes to plywood, the GST, which is now in effect, is 28%, which is far more than the previous VAT rate of 5 or 6%. The high cost of the GST on plywood has resulted in an increase in the price of wooden furniture. Companies that produce furniture out of wood may claim an input tax credit (ITC) on the GST paid for plywood.
|Particulars||GST on Furniture||VAT|
|Wood in the form of chips, sawdust, and wood waste||5%||Average 4-5%|
|Wooden furnishings and ornaments, including tableware and kitchenware||12%||Average 12.5%|
|Wood pulp and bamboo pulp||12%||Average 4-5%|
|Wood used to manufacture umbrellas, walking sticks, wooden boxes, drums, and tool handles, among other related products.||12%||Average 4-5%|
|Residual lyes from wood pulp production; chemically treated wood, containing lignin sulfonates (excluding tall oil)||18%||Average 4-5%|
|Wood tar, vegetable pitch, wood naphtha, brewers’ pitch, wood tar oils; wood preparations derived from resin, resin acids, or vegetable pitch and wood creosote.||18%||Average 4-5%|
|Fiber wood, plywood, and laminated wood, as well as materials that resemble wood or are woody in character.||28%||Plywood 5-6%
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Others Average 12.5%
|Cane furniture||28 %||Average 4-5%|
|Wood charcoal or firewood||Exempt||Exempt|
After applying these rates, you will be able to establish the prices of your items in accordance with the requirements imposed by the government. Keep a close check on the claims that are legally permissible for you to submit.
Iron and steel furniture manufacturer
Under GST, except wooden furniture, all other types of furniture are subject to a 28% tax. In contrast to the ordinary VAT rate of 5%, iron and steel will be subject to an 18% GST, regardless of the iron or steel’s characteristics. ITC is provided to producers at the rate of 18% of iron or steel imported under GST.
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A bought a steel almirah from XYZ furniture for Rs 50,000. A substantial division of XYZ furniture is dedicated to creating iron and steel furniture exclusively. XYZ had acquired and used steel worth Rs 30,000 for the furniture construction.
|Applicable VAT on the Table (X)||Rs 6,250 (12.5% of Rs 50,000)|
|Available ITC on raw materials (Y)||Rs 1,250 (5% of Rs 25,000)|
|Total Tax Liability (X-Y)||Rs 5,000|
|Applicable GST on the table (X)||Rs 14,000 (28% of Rs 50,000)|
|Available ITC on raw materials (Y)||Rs 4,500 (18% of Rs 25,000)|
|Total tax liability (X-Y)||Rs 9,500|
Effect of GST on furniture industry
When compared to the VAT tax rates, the tax rate on wood, iron, and steel under the GST is much greater. The price of the furniture that is constructed using these materials has gone up as a direct result. When compared to the tax burden associated with the production of wood, the tax liability associated with the production of steel and iron is substantially larger. It is safe to argue that makers of wooden furniture gain more under the Goods and Services Tax (GST) system than manufacturers of iron and steel furniture do.
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