GST Rates and HSN Code 8506 for Primary Cells

Primary cells, or primary batteries, are the most common items found in most devices. From remote controls and clocks to medical devices and flashlights, primary cells power daily devices. These are charged in India in the Goods and Services Tax (GST) scheme. Primary cells and batteries come under the category of HSN Code 8506 in the GST regime. Being aware of GST implications on primary cells is important for manufacturers, retailers, and even bulk buyers to keep themselves tax compliant and cost-effective in operations. To companies that wish to maintain proper invoicing and input tax credit handling, GST rates and classification are important so that they do not incur unnecessary penalties or errors. This article explains the GST rate under HSN Code 8506, its extent, and its relevance to different industries.

Analysis of HSN Code 8506 and applicable GST Rates thereon

HSN Code 8506 is for Primary Cells and Primary Batteries. They're batteries that once used cannot be recharged and need to be thrown away once their charge is depleted. The code comes under:

AA, AAA, and other usual sizes of batteries
Non-rechargeable lithium cells
Button cells used for watches and hearing aids
Alkaline and zinc-carbon batteries

Goods classifying under the HSN Code 8506 in the GST regime attract an 18% GST, consisting of 9% Central GST and 9% State GST, or 18% Integrated GST if sold inter-state. This classification is to be applied to all types of primary batteries except exempted ones or classified under other product classes on account of specialized specifications.

Primary. Cells in the Indian market find application. Extremely widespread in consumer electronics, medical equipment, sensors in remote locations, and children's toys. Depending on the extensive application case, the GST rate has a significant impact on pricing, procurement, and logistics, particularly for small companies and distributors.

Producers and traders must ensure correct usage of this rate in their bills, and the retailers must ensure that their dealers do not apply proper tax methodologies. For organizations involved with bulk transactions, the rate of 18% is most relevant to total tax expenditure, and hence accurate accounting is necessary.

Product Type	HSN Code	Description	GST Rate
AA, AAA Batteries	8506	Standard non-rechargeable alkaline or zinc-carbon cells	18%
Button Cells	8506	Small round cells used in watches, hearing aids	18%
Lithium Primary Cells	8506	Non-rechargeable lithium batteries	18%
9V Batteries	8506	Used in smoke detectors, meters, toys	18%
D and C Size Primary Batteries	8506	Large cylindrical non-rechargeable cells	18%

Benefits of GST Classification Under HSN 8506

Easy Tax Compliance: Having a uniform HSN code such as 8506 for primary cells simplifies tax reporting. Companies can simply put stock items in the correct tax slabs, and GST returns would be more precise.‍
Pricing Transparencies: Equal 18% taxation for all primary cells simplifies it for companies or consumers. Everyone pays the same amount of tax irrespective of the state of purchase or place of origin.
‍Simplifying Input Tax Credit (ITC): Companies dealing in taxable items can claim input tax credit on GST paid on batteries. For example, a hospital equipment company buying button cells for resale or use on their machines can claim ITC in an attempt to minimize their net tax.
‍Simplification of Digital Compliance: With proper tax categorization, GST-ready invoicing and book-keeping systems are able to fill in tax boxes automatically. This minimizes human mistakes and simplifies filing processes.
‍Facilitates Proper Product Segregation: HSN Code 8506 provides companies with the ability to segregate rechargeable (secondary) and non-rechargeable (primary) batteries, which would otherwise charge a different rate of GST. This prevents misclassification, resulting in tax penalties.

Disadvantages

Excessive Tax Rate on Simple Products: For certain segments such as education or rural health, 18% GST on batteries of low-cost devices might be heavy. Primary cells are generally needed but throwaway, and the levy adds to periodic expenses.‍
Hybrid Battery Classification Confusion: Certain batteries being sold as long life or half-rechargeable can lead to confusion among companies in classification against HSN 8506 or other numbers. Without expert advice, chances of misclassification grow.
‍Environmental Issues Not Solved by Tax: Not a tax issue but important, primary cells are an environmental waste management challenge. The GST rate does not differentiate between the environmentally friendly and toxic kinds, losing a chance to encourage cleaner battery alternatives.

Conclusion

Primary cells are irreplaceable in today's utility-oriented and technologically advanced world. Such products being classified under HSN Code 8506 and having a distinct GST rate of 18% charged on them gives businesses a platform for correct taxation and greater operational convenience. Though the rate appears to be prohibitive for some businesses, advantages in classification, compliance, and input tax credit generally counterbalance the cost. Being aware and well-versed with such codes makes businesses efficient as well as transparent.

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FAQs

1. Do rechargeable batteries fall under the same HSN code 8506?

No, HSN Code 8506 would be reserved for non-rechargeable (primary) batteries alone. Rechargeable ones will be of a different charge, normally under HSN Code 8507.

2. Can I claim the input tax paid on GST on primary cells used in production?

Yes, if you are utilizing the original cells in taxable business activities, you can claim input tax credit on the 18% GST levied if you have valid tax invoices.

3. How do I charge the proper rate of GST on batteries that I am selling?

Always keep the latest GST rate notifications updated and check the HSN Code 8506 in your billing software. GST-approved billing software such as Swipes will do this automatically for you.

4. What if I charge batteries under an incorrect HSN code?

It can result in notices, fines, and input tax credit refusal. Regular audits and implementation of new software will avoid such mistakes.

5. Are button cells and hearing aid batteries charged at 18% as well?

Yes, the button cells and non-rechargeable batteries used in products such as hearing aids come under HSN Code 8506 and are subject to 18% GST unless exempted.