Air-conditioning machines under heading 8415 generally attract 28% GST. Whether installation is separately taxed at a service rate depends on the contract and composite/mixed-supply rules—not merely on issuing two invoices. Business ITC can be available if section 16 conditions are met and the credit is not blocked, with particular care for AC systems incorporated into immovable property.
How this 2026 guide was prepared
The supplied draft was treated as a topic brief, not as legal authority. Outdated portal dates, overbroad thresholds, invented procedures and incorrect rate or format claims were corrected against official GST, CBIC, GST Council and India Code materials available on 2026-07-28.
Effective-date warning: GST rates, exemptions, portal screens and due dates can change. Confirm the live notification and return period before acting.
Rate and classification
CBIC’s current goods schedule places air-conditioning machines under HSN 8415 at 28%. Subheadings distinguish window or wall types, vehicle systems, reversible heat pumps and other machines. Product specifications and the Customs Tariff—not marketing names—control the eight-digit code.
How to calculate taxable value
For a straightforward ₹35,000 unit, GST at 28% is ₹9,800 and the tax-inclusive amount is ₹44,800. Packing, freight, insurance and incidental supplier charges may enter value under section 15. Eligible pre-supply discounts shown on the invoice can reduce value.
Installation: separate or composite
If supply of the AC and installation is naturally bundled with the AC as principal supply, the composite supply generally follows the principal rate. Artificially separating invoices does not change substance. A genuinely independent installation service may have its own SAC and rate; review contracts, responsibility and customer choice.
Input tax credit
A registered business needs a valid tax invoice, receipt, supplier-furnished details and payment of tax/return conditions under section 16. Personal consumption is blocked, but section 17(5) analysis for immovable property and works contracts is more precise than saying every personal AC is blocked under that clause.
Movable versus immovable systems
Portable, window or removable split systems may remain movable plant, depending on facts. Permanently integrated HVAC, ducting and civil works can raise blocked-credit questions under section 17(5)(c) and (d), including the plant-and-machinery explanation. The test is functional and factual, not a simple product label.
Second-hand sales and exports
A registered second-hand dealer may use rule 32(5) margin valuation where its conditions are met, including non-availment of ITC on purchase; this is not automatic for every used AC. Exports are zero-rated and may use LUT/bond without IGST payment or payment-and-refund routes under current law and portal procedure.
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Request GST supportFrequently asked questions
What is the GST rate on a new AC?
Air-conditioning machines under HSN 8415 generally attract 28%.
Is installation always 18%?
No. The contract may form a composite supply following the AC’s principal rate.
Can a business claim ITC on an AC?
Potentially, if section 16 is met and no section 17 restriction applies.
Is ITC automatically blocked for personal use?
Personal-consumption credit is blocked, but cite the correct statutory rule and apportion mixed use.
Does GST on a used AC apply only to profit?
Only an eligible dealer satisfying rule 32(5) can use margin valuation.
Are exported ACs taxed at 18% IGST?
No. Exports are zero-rated; any payment route uses the applicable product IGST rate and refund framework.
Does HSN 8415 cover every cooling device?
No. It covers machines meeting the heading description; air coolers and parts may classify elsewhere.
