Explore GST rules for firecrackers in India, covering the 18% rate, applicable HSN codes, and benefits like input tax credits.
The article discusses the application of Goods and Services Tax (GST) on firecrackers and other pyrotechnic items in India. It covers the historical tax rates, current GST rates, and the relevant Harmonized System of Nomenclature (HSN) codes.
GST Levies on Firecrackers
Prior to 2017, manufacturers of firecrackers and similar pyrotechnic products were subject to a Value-Added Tax (VAT) of 14.5%. Following the implementation of GST, the GST Council established varying GST rates for different product categories, including standard rates of 28%, 18%, 12%, 5%, and 0%. Initially, in 2017, firecrackers and related fireworks were placed under the 28% GST slab. This higher rate negatively impacted manufacturers and traders. Consequently, during the 23rd GST Council meeting on November 10, 2017, the rate for these items was reduced to 18%. As of the 2023-24 financial year, pyrotechnic articles are taxed at an 18% GST rate, which represents a 3.5% increase compared to the previous VAT regime. Example: Consider a firecracker producer in Sivakasi who sells a pack of “Anar” (a type of cracker) for ₹300. With the 18% GST included, the consumer’s total cost for this pack would be ₹354 (₹300 + 18% of ₹300). In contrast, before 2017, the same product would have cost ₹343.5 under the old tax system.
GST Application for Firecrackers
The ultimate burden of indirect taxes on a product’s price can fluctuate based on the tax structure applied to its raw materials, packaging, and transportation. In the era preceding GST, a fragmented system involving VAT, excise duties, and service taxes at different rates often led to inflated prices for consumers and state-specific variations. However, the introduction of input tax credits and a unified tax structure under the GST regime has largely mitigated these issues for firecracker producers and merchants.
For instance, the manufacturing of firecrackers necessitates several raw materials, such as:
- Propellent powder
- Denominating cap
- Safety fuse
- Packing paper
- Packing box
- Paper and cardboard
- Plastic wrapper
- Flash powder
- Cordite
Individual GST rates apply to these raw materials, enabling businesses to claim input tax credits. The GST Council has standardized the GST rate for most pyrotechnic raw materials at 18%. Similarly, cardboard boxes and plastic packaging materials are also subject to an 18% GST rate.
HSN Codes for Firecrackers
The Harmonized System of Nomenclature, or HSN codes, for various pyrotechnic articles are detailed below:
| Category Description | HSN Code |
|---|---|
| Fireworks, Signalling Flares, Rain Rockets, Fog Signals, and Other Pyrotechnic Articles | 3604 |
| Fireworks, Signalling Flares, Rain Rockets, Fog Signals, and Other Pyrotechnic Articles Fireworks | 36041000 |
| Fireworks, Signalling Flares, Rain Rockets, Fog Signals, and Other Pyrotechnic Articles Other: Ship Signals | 36049010 |
| Fireworks, Signalling Flares, Rain Rockets, Fog Signal, and Other Pyrotechnic Articles Other: Other | 36049090 |
| Other | 360490 |
Reference – https://cbic-gst.gov.in/gst-goods-services-rates.html
FAQs: GST on Firecrackers
- What is the GST rate on firecrackers?
Firecrackers and pyrotechnic articles are taxed at 18% GST. - What is the HSN code for crackers?
Fireworks and firecrackers fall under HSN code 3604. - Why did the GST rate on firecrackers change?
They were first placed in the 28% slab in 2017, then reduced to 18% at the 23rd GST Council meeting on 10 November 2017. - How much GST is on a Rs 300 cracker pack?
18% of Rs 300 is Rs 54, so the total cost to the consumer is Rs 354. - Were firecrackers taxed before GST?
Yes – under the earlier VAT regime the rate was about 14.5%.
