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Published : January 3, 2024, Updated : January 23, 2024

HSN Code for Computers and Laptops with GST Rate

HSN Code for Computers and Laptops with GST Rate

The HSN code for laptops is 84713020, and they attract an 18% GST rate. The GST Council, responsible for deciding tax margins, links rates directly to HSN codes, spanning from 0% to 28%.

This brief overview explores the correlation between HSN codes and GST rates, specifically focusing on laptops, PCs, and related electronic devices.

Understanding the HSN code for laptops aids in determining the applicable GST, with the tax rate varying across different goods and services, as governed by the GST Council. This knowledge ensures clarity on taxation for products falling under the laptop HSN code.

Understanding HSN Code

HSN, which stands for Harmonized Structure of Nomenclature, is like a special language the government uses to organize different things people buy and sell. At first, the government used a six-digit code to sort out products. But as technology got better, they added two more digits to make it even more precise.

Now, let’s talk about computers, laptops, and similar stuff. They got their own special code, which is 8471. The first two digits, 84, are like the chapter number. It’s a big category that includes mechanical things like computers, boilers, and even nuclear reactors. The next two digits, 71, are like a detailed description. In this case, they’re talking about machines that can handle data automatically—they can take in information, process it, and send it out in a coded way.

So, in simple terms, HSN codes help the government organize products, and for computers and related gadgets, the code 8471 tells us it’s about automatic data machines found in the big category of mechanical instruments. It’s like a special code language that makes things clear and organized when we’re dealing with different products in the business world.

Relation Between HSN Code and GST

Finding the right HSN Code is super important because it decides how much GST (Goods and Services Tax) you have to pay when selling a product. Once you know the HSN Code for your product, figuring out the GST rate becomes a breeze. So, it’s like a secret code that helps the government and businesses understand what kind of product it is and how much tax should be applied to it. Making sure you have the correct HSN Code is like unlocking the key to knowing the right GST rate for your item.

What Determines the Gst Rates in India?

The GST (Goods and Services Tax) rates in India are decided by a group called the GST Council. They’re like the decision-makers for how much tax you pay on different things you buy or services you use. This council meets regularly and talks about what tax rates should be for various products and services. They can change these rates often based on discussions during their meetings.

Recently, the government collected more GST than they expected. Because of this, they’re thinking about reducing the tax rates for some things. It’s like they have extra money, and they want to give people a bit of a break by making certain items a little less expensive.

So, the government is actively trying to figure out ways to lower the GST rates for specific categories of goods. This way, people might end up paying a bit less tax when they buy certain stuff. It’s a way for the government to balance things out and make sure people benefit from the extra tax money collected.

Also Read: HSN Codes: What You Need to Know for Trade and Taxation

HSN Code for Laptop

Understand the HSN code for laptop in detail below:

  • HSN codes in Chapter 84 cover personal computers, laptops, and related devices manufactured in India.
  • Chapter 84 specifically deals with “Automatic Data Handling Machines & Units.”
  • The four-digit HSN code 8471 is assigned to represent computers.
  • The GST margin for this code is fixed at 18%.
  • “Automatic data handling machine” refers to any electrical device meeting specific criteria.
  • These criteria include storing processing software and supporting data, providing a flexible user interface, executing arithmetic operations, and implementing logical reasoning.
  • The machine must function as a singular component or system capable of hosting multiple subunits.
  • Any subunit linked to the primary data handling device is categorized under HSN Code 8471.
  • Subunits, including mouse, printer, keyboard, and USB storage, are actively used to achieve computational goals.
  • They are linked to the CPU either directly or through intermediary units.
  • These supporting gadgets receive and transmit information as signals.
  • Fluctuations in the performance of these subunits can render the computer non-functional.
  • The HSN Code – 8471 covers the entire system, including supporting devices.
  • The GST rate for this code is 18%.
  • The code is part of Chapter 84, emphasizing Automatic Data Handling Machines & Units.
  • The phrase “automatic data handling machine” encompasses various electrical devices.
  • Regular updates to HSN codes may occur, so staying informed is crucial.

Tax Levied on Laptops

Before GST (Goods and Services Tax) came into play, sellers used to pay a tax called VAT (Value Added Tax) on laptops in India. This tax was 14% of the net revenue they earned from selling laptops. In some states, this VAT could go as high as 15%. It was kind of like a cost for the sellers.

Now, under GST, there’s a fixed tax rate for laptops, just like for other stuff. When you buy a laptop, you pay 18% GST on the laptop’s maximum retail price. It’s a straightforward system, making it easier to know how much tax is included in the laptop’s price. So, before it used to be this variable VAT, and now it’s a set GST rate that everyone follows when buying or selling laptops in India.

HSN Codes for Computer Hardware and Software

Let’s break down the HSN codes for computer hardware and software. The common code is 8471, which covers various computing tools. Now, let’s look at more specific codes:

847160: This code is for printing devices and input components like mouse, scanner, and keyboard.

847170: If we’re talking about storage instruments like hard disks and flash drives, the code becomes 847170.

847130: Now, this is a six-digit code (847130) specifically for personal computers weighing less than 22 pounds. It’s used in offices and homes.

Here’s a table with more details:
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These codes help categorize and understand different computer-related items, making it easier for businesses and customers.

Final Words

Understanding HSN codes and GST rates simplifies the world of commerce. HSN codes, like a special language, organize products, with laptops having the code 84713020 and an 18% GST rate. The GST Council, acting as decision-makers, links tax rates directly to these codes, aiming for fairness. The correlation between HSN codes and GST ensures clarity on taxation, making it straightforward for products under specific codes, such as laptops.

Moreover, the system adapts, evidenced by the transition from variable VAT to a fixed 18% GST rate for laptops under the Goods and Services Tax. The HSN codes for computer hardware and software further break down categories, aiding businesses and customers in comprehending and navigating the complexities of the electronic world. It’s like a code language that speaks clarity in the dynamic realm of goods and services, fostering a more accessible and organized business environment.

Also Read: Demystifying HSN Codes: Impact on Your Business and Its Significance

In the dynamic world of business, managing finances efficiently is key to ensuring sustained growth and success. One crucial aspect that often takes center stage is the management of receivables – the money owed to your business by customers.

This blog aims to shed light on the strategic use of financing receivables and the impactful practice of vendor financing, offering insights that are both accessible and beneficial to businesses of all sizes.

Financing Receivables:- What is Financing Receivables

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Accounts receivable financing is a different way to get money compared to going to a regular bank. Basically, it’s a money move where you borrow cash using the money your customers owe you.

Here’s the deal: if your company is waiting for money to come in, but you need cash ASAP to cover your bills, accounts receivable financing steps in to help. It’s also great for businesses that don’t want to hassle with collecting money from people who owe them. Instead, they can pay a little fee and get the money right away.

In simple terms, it’s like turning the future money you’re expecting into real cash when you need it!

Types of Financing Receivables

Here are different types of financing receivables options that you need to understand:

Collateralized Loan Option

  • If you have customers who owe you money, you can use these accounts as collateral for a loan from a financing company.
  • When your customers settle their bills, you can use that money to pay off the loan.

Invoice Factoring Option

  • Another way is to sell your accounts receivable to a factoring company.
  • With a service known as invoice factoring, the factoring company buys your non-delinquent unpaid invoices.
  • They pay you an upfront percentage, called the advance rate, of what your customers owe.
  • The factoring company then collects payments directly from your customers, and once the accounts receivable are paid, they keep a small factoring fee and give you the remaining balance.

Advantages of Financing Receivables

Understand some of the benefits of financing receivables to help you make a wiser and informed decision:

Upfront Cash for Unpaid Accounts:
With receivables financing, you receive immediate funds for invoices that your customers haven’t paid yet. It’s like getting a cash advance based on the money you’re expecting to receive in the future.

Potentially Lower Financing Costs: The financing rate in receivables financing may be more cost-effective compared to other borrowing options such as traditional loans or lines of credit. This can be particularly beneficial for businesses looking to manage their costs while accessing the necessary funds.

Relief from Unpaid Bill Collection: Opting for receivables financing can lift the weight of chasing down unpaid bills from your shoulders. Instead of spending time and resources on collections, a financing company takes on this task. It allows your business to focus on its core activities while ensuring a steady flow of working capital.

Ideal for Cash Flow Challenges: Receivables financing is a great solution for businesses facing cash flow issues. Whether you’re waiting for payments from customers or need quick funds to cover operational expenses, this option provides a flexible and accessible way to address cash flow gaps. It’s suitable for a variety of companies, regardless of their size or industry, offering a lifeline during financially challenging periods.

Disadvantages of Financing Receivables

Understand some of the cons of financing receivables to help you make a wiser and informed decision:

Requirement of Outstanding Invoices: To benefit from receivable financing, your business must have outstanding invoices, meaning customers owe you money. This financial option leverages these accounts receivable as assets that can be used to secure a loan or sell to a factoring company.

Importance of Clear Terms for Unpaid Accounts: Keeping clear and accurate records of the terms associated with unpaid accounts is crucial. This includes documenting when payments are expected, the amounts owed, and any specific conditions. Maintaining meticulous records is essential for the smooth process of receivable financing, ensuring transparency and accuracy in the transactions.

Impact of Credit History on Qualification: Qualifying for receivable financing may depend on your business’s credit history. If your business lacks a stable credit history, it could pose a challenge in accessing this form of financing. Lenders or factoring companies often assess the creditworthiness of a business before extending receivable financing. Having a stable credit history enhances your eligibility and may lead to more favorable terms. It emphasizes the importance of maintaining good financial standing to maximize the benefits of receivable financing.

Vendor Financing:- What is Vendor Financing?

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Vendor financing, also known as supplier financing or trade credit, is a financial arrangement where a company obtains funding or extended payment terms from its suppliers. In this scenario, the vendor, or the supplier of goods or services, plays a crucial role in providing financial support to the purchasing company.

It’s a smart move when you’re buying a lot of big stuff. If you’re getting things like inventory for a store, computers, vehicles, or machinery, talk to your suppliers about financing deals. It’s like making a deal to pay for these things over time instead of all at once. This helps you avoid running low on cash and gives you the chance to grow your business while paying for the equipment. It’s a win-win!

Also Read : What Is a Vendor? Definition, Types, and Example

Benefits of Vendor Financing

Understand some of the benefits of vendor financing to help you make a wiser and informed decision:

Equipment Purchase without Upfront Payment: One big advantage of vendor financing is that it lets you buy the equipment you need without having to pay for it all upfront. Instead of emptying your wallet in one go, you can work out a deal with your vendor to spread the cost over time. This means you can get essential equipment for your business without a hefty immediate expense.

Preservation of Cash for Emergencies: By using vendor financing, you’re able to keep more cash on hand. This is crucial for dealing with unexpected emergencies or opportunities that may come up in your business journey. Preserving your cash flow provides a financial safety net, allowing you to handle unforeseen challenges without disrupting your day-to-day operations or long-term plans.

Also Read: How to Use Vendor Financing to Buy a Business?

Disadvantages of Vendor Financing

Understand some of the cons of financing receivables to help you make a wiser and informed decision:

Extended Payment Period: One downside of vendor financing is that your payments might stretch out over a long period. While this eases the immediate financial burden, it could mean you’re committed to paying for the equipment over an extended timeframe. This extended payment period may limit your financial flexibility and tie up resources that could be used for other business needs.

Risk of Equipment Retrieval: If you fall behind on your payments, there’s a risk that the vendor could take back the equipment. This is a significant concern because it means not keeping up with your agreed-upon payment schedule could result in losing the very equipment your business relies on. It emphasizes the importance of carefully managing your financial commitments to avoid potential disruptions to your operations.

Distinguishing Accounts Receivables Finance from Accounts Receivable Factoring

Navigating the world of turning accounts receivables into immediate cash flow can be a game-changer for businesses in need of quick funds. While both services share the common goal of providing timely financial solutions, it’s essential to understand their fundamental differences:

Nature of the Transactions

Accounts Receivables Finance (Invoice Financing)
Think of this as a loan. Your business uses its outstanding invoices as collateral to secure a loan. It’s a financial arrangement where you borrow against the money your customers owe you, providing a flexible solution to bridge financial gaps.

Accounts Receivable Factoring
In contrast, factoring involves the outright sale of your receivables. Factoring companies become the owners of the current asset – your unpaid invoices. They pay you a portion upfront (known as the advance), and then they collect the full amount directly from your customers.

Roles of the Service Providers

Factoring Companies
Factoring companies act as buyers of a business’s current assets, taking ownership of the accounts receivable. They assume the responsibility of collecting payments from your customers.

Accounts Receivable Financing Companies
On the other hand, companies providing accounts receivable financing act as financiers or lenders. They extend a loan to your business, using the outstanding invoices as collateral, without taking ownership of the receivables.

Scope of Application


Accounts Receivable Factoring

Factoring is specifically tailored for commercial financing. It is a solution designed for businesses looking to optimize their cash flow by selling their unpaid invoices in commercial transactions.

Final Words

In the world of business, managing finances wisely is the key to success. Whether it’s unlocking cash through accounts receivables financing or securing equipment with vendor financing, these financial tools offer both opportunities and considerations. Accounts receivables financing turns future money into immediate cash, ideal for addressing cash flow challenges.

Vendor financing, on the other hand, lets you spread the cost of essential equipment, preserving cash for emergencies. While each has its advantages, it’s crucial to weigh the pros and cons. Whether you’re considering accounts receivables financing or vendor financing, understanding these financial strategies empowers you to make informed decisions, propelling your business toward sustained growth and financial resilience.

Credlix is becoming a big player in helping businesses with money. We want to make small businesses stronger, so we offer really good financing solutions made just for them.

Also Read : What Is a Vendor? Definition, Types, and Example

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