NEW DELHI – India's Goods and Services Tax (GST) Fitment Committee has recommended against any reduction in the current 18% GST rate applied to air purifiers, water purifiers, and their essential components, including HEPA filters and RO membranes. This decision comes despite significant pressure from a parliamentary panel and observations from the Delhi High Court advocating for tax relief on these products, citing concerns over public health and rising pollution.
Calls for GST Reduction on Purifiers
The recommendation maintains the existing tax structure, rejecting proposals that sought to lower the GST on air purifiers to 5% or even zero. The issue gained prominence amidst escalating worries about air pollution, particularly in major Indian cities, leading to an increased demand for purification devices.
The Delhi High Court, during proceedings for a public interest litigation (PIL) in Kapil Madan vs Union of India, had specifically noted that the GST on air purifiers should be reduced. Separately, the Department-related Parliamentary Standing Committee on Science and Technology, Environment, Forests and Climate Change, in its 401st report, had also urged for the reduction or complete abolition of GST on air purifiers and HEPA filters.
Both bodies highlighted the apparent contradiction between government initiatives to combat air pollution and the substantial 18% tax burden placed on devices that citizens use to protect themselves from its adverse effects.
Committee's Rationale for Maintaining Rates
The Fitment Committee, however, cited several structural and economic concerns for its decision. Reducing the GST to 5% could lead to an "inverted duty structure," where manufacturers would pay 18% GST on most inputs but collect only 5% on their final products, potentially complicating tax credits.
A nil GST rate, on the other hand, would prevent manufacturers from claiming input tax credit altogether, effectively embedding input taxes into the ex-factory price and potentially not translating into lower consumer prices.
Furthermore, the committee pointed out that HEPA filters are utilized across various sectors beyond household air purifiers, including HVAC systems, clean rooms, laboratories, hospitals, and industrial settings. Differentiating a lower rate solely for domestic use could create complex classification and compliance challenges.
There was also concern that a reduction in GST could inadvertently benefit cheaper imported air purifiers, giving them a competitive edge over domestically manufactured products.
Water Purifiers Also Unchanged
In a parallel recommendation, the Fitment Committee also decided to keep the 18% GST rate on household water purifiers and their consumable parts, such as RO membranes, filter cartridges, and filter housings. A previous proposal to reduce the GST on water purifiers from 18% to 12% was considered and rejected during the 45th GST Council meeting.