Looking for expert help with Battery GST rate and HSN code? The team at Tax Garden, based in Kondapur, Hyderabad, helps Indian SMEs stay compliant. End-to-end filings, notices, and deadline tracking, all in one place.
Key Takeaways
- Car, two-wheeler and inverter batteries, lead-acid or lithium-ion, fall under HSN 8507 at 18% GST (Notification 9/2025-CT(R), Schedule II, S. No. 480), from 22 September 2025.
- Home inverters and UPS units are static converters of HSN 8504, also 18% (S. No. 477). Only EV chargers in 8504 are 5%.
- On an exchange offer, charge GST on the new battery's price without the exchange discount (Rule 27, CGST Rules).
- A free warranty replacement carries no GST (Circulars 195/07/2023-GST and 216/10/2024-GST). A pro-rata charge to the customer does.
- For income tax, 44AD (Section 58 from 1 April 2026) covers turnover up to Rs 2 crore or Rs 3 crore. Don't take Rs 2 lakh or more in cash from one buyer for one deal.
What is the GST rate and HSN code for batteries? Batteries of all kinds sold on their own, including car, bike and tubular inverter batteries and lithium-ion packs, are electric accumulators under HSN 8507 and attract 18% GST (9% CGST plus 9% SGST) under Schedule II, S. No. 480 of Notification 9/2025-Central Tax (Rate), from 22 September 2025. Home inverters and UPS units (HSN 8504) are also 18%.
A battery shop's GST rate is simple. Its billing isn't. In a single day you might sell a car battery against the customer's old one, swap a dead inverter battery under the brand's warranty, charge a pro-rata amount on another, and load a tempo of scrap batteries for the recycler. Each of those has its own GST answer, and the rate is the easy part. This post covers rates, exchange offers, warranty claims, scrap sales, registration and composition, then income tax for FY 2025-26 (AY 2026-27) under the Income-tax Act 1961, with the Income-tax Act 2025 sections that apply from 1 April 2026. It's written for battery and inverter dealers, service centres and the CAs who file for them. If you mainly sell vehicle spares and tyres, our auto spare parts and tyre shop guide is the closer fit.
What GST rate do batteries and inverters carry?
Almost everything on your shelf is 18%. Notification 9/2025-Central Tax (Rate), in force from 22 September 2025, puts both headings you deal in most into Schedule II.
Tax Rate Chart
GST on Batteries, Inverters and Related Items (from 22 September 2025)
Car, two-wheeler, tractor and inverter batteries, lead-acid or lithium-ion (8507)
Schedule II, S. No. 480
Home inverters, UPS units and other static converters (8504)
Schedule II, S. No. 477
Primary cells and dry batteries, such as AA and AAA cells (8506)
Schedule II, S. No. 479
Installation, maintenance and repair services (heading 9987)
Notification 11/2017-CT(R), S. No. 25
Old batteries sold as lead scrap (7802) or e-waste (8549)
Schedule II, S. Nos. 347 and 521
Charger or charging station for electric vehicles (8504)
Schedule I, S. No. 438
Source: CBIC Notification 9/2025-Central Tax (Rate), 17 September 2025, in force 22 September 2025; Notification 11/2017-Central Tax (Rate), S. No. 25
What changed on 22 September 2025. The rate-change annexure of the 56th GST Council meeting moved batteries of heading 8507 other than lithium-ion, which includes the lead-acid batteries most shops sell, from 28% to 18%. Lithium-ion batteries were already at 18%. If you still hold supplier invoices or credit notes from before that date, they'll show the old rate, and that's correct for those dates.
A battery sold with an inverter. When you sell an inverter and a battery together as a home backup set, both items are 18%, so it doesn't matter whether you treat them as one supply or two. Show each item with its own HSN code on the invoice anyway. It keeps your GSTR-1 HSN summary accurate.
Installation charges. If you charge separately for installing an inverter or wiring a battery bank, that's a service under heading 9987 at 18% (Notification 11/2017-Central Tax (Rate), S. No. 25). Same rate as the goods, so no split to argue about.
Solar is different. A solar inverter or battery supplied as part of a rooftop solar system may fall under the 5% renewable energy entry (Schedule I, S. No. 437) with its 70:30 rule. A standalone 8504 static converter is listed at 18%. Our solar installer guide covers that split; don't apply 5% to a plain home inverter.
Exchange offers: GST on the full price
Nearly every car or inverter battery sale comes with an old battery handed over the counter. The discount you give for it doesn't reduce the GST value.
Rule 27 of the CGST Rules says that when consideration isn't wholly in money, the value of the supply is its open market value. The rule's own illustration is a phone: sold for Rs 20,000 along with an old phone, when the price without exchange is Rs 24,000, the open market value is Rs 24,000.
Example: your list price for a car battery is Rs 5,000 before tax. A customer hands over an old battery and you allow Rs 800 for it.
| Line on the bill | Amount |
|---|---|
| Taxable value (price without exchange) | Rs 5,000 |
| CGST at 9% | Rs 450 |
| SGST at 9% | Rs 450 |
| Invoice total | Rs 5,900 |
| Less: value allowed for old battery | Rs 800 |
| Customer pays | Rs 5,100 |
If you instead bill Rs 4,200 as the taxable value, you've under-paid GST by Rs 144 (18% of Rs 800) on that one sale. Across a few hundred exchanges a year, that becomes a real demand with interest. The customer is a consumer, not a registered business, so no GST arises on the old battery they hand you.
Warranty replacements: when GST applies and when it doesn't
Batteries fail inside warranty all the time, and the way you settle it with the brand decides the GST. CBIC Circular 195/07/2023-GST, dated 17 July 2023, sets out the cases. It was written for replacement of parts, but Circular 216/10/2024-GST, dated 26 June 2024, says it applies equally when the whole product is replaced (para 3.3). A dead battery swapped for a new one is covered.
Free replacement, nothing charged to the customer. No GST is payable by the dealer on the replacement (Circular 195, S. No. 3). If the brand sends you a replacement battery for this without charging you, it pays no GST on that and needn't reverse its credit (S. No. 4(b)).
You swap from your own stock and the brand replenishes it free. This is the common counter practice: you hand the customer a new battery at once, raise a requisition, and the brand sends a replacement on a delivery challan without charging you. Circular 216 added this as S. No. 4(d): no GST on the replenishment, and the brand needn't reverse its credit.
You use your own stock and invoice the brand. You're making a supply to the brand. Raise a tax invoice with GST, and the brand can claim credit on it. You don't reverse the credit on the battery you used (S. No. 4(a)).
You use your own stock and the brand gives you a credit note. The brand can reduce its tax under Section 34(2) of the CGST Act only if you've reversed the credit you took on the battery replaced (S. No. 4(c)). Track these credit notes; it's where dealers most often carry excess credit without noticing.
Pro-rata warranty. Many batteries have a free-replacement period followed by a pro-rata period. If a battery fails in the pro-rata period and the customer pays Rs 2,500 towards the new one, GST at 18% (Rs 450) applies to that Rs 2,500. The circular says GST is payable on any additional consideration charged to the customer.
Extended warranty. If you sell it yourself with the battery at the time of sale, it becomes part of that supply. If the brand or a third party supplies it, even at the time of sale, or the customer buys it later, it's a separate supply of services, taxed in the hands of whoever supplies it (Circular 195, S. No. 6, as substituted by Circular 216, para 5.4).
Scrap sales, registration and composition
Old batteries you sell to a recycler. Lead waste and scrap (7802) is Schedule II, S. No. 347, and electrical and electronic waste and scrap (8549) is S. No. 521. Both are 18%. Raise a tax invoice for every scrap lot; a tempo of old batteries often crosses Rs 50,000, so you'll need an e-way bill too.
E-way bills. Rule 138(1) of the CGST Rules requires an e-way bill before moving goods worth more than Rs 50,000, including stock transfers and goods sent for warranty claims. Some States set their own limit for movement within the State; our State-wise e-way bill limits list them.
Monthly GST example: in a month you sell batteries and inverters worth Rs 8,00,000 before tax (output GST Rs 1,44,000) and scrap worth Rs 40,000 (output GST Rs 7,200). You bought stock from your distributor for Rs 6,50,000, with GST of Rs 1,17,000 showing in GSTR-2B. Total output tax is Rs 1,51,200, so you pay Rs 34,200 in cash through GSTR-3B after using the credit.
When to register. A goods-only business can wait until aggregate turnover crosses Rs 40 lakh under Notification 10/2019-Central Tax, but that higher limit doesn't apply to intra-State suppliers in Telangana and some other States, where the Section 22(1) limit of Rs 20 lakh applies. Our registration limit guide has the State-wise list, and our GST registration service files the application. Most battery dealers register early, because fleet owners, hospitals, offices and housing societies want a tax invoice for credit.
Composition. Batteries and inverters aren't barred. A trader with last year's turnover up to Rs 1.5 crore (Rs 75 lakh in the States named in Notification 14/2019-Central Tax) pays 1% of turnover (0.5% CGST plus 0.5% SGST, Rule 7 of the CGST Rules), issues a bill of supply and claims no credit. With 18% goods and a thin margin, think it through: if many buyers are businesses, they can't claim credit on your bill and may go elsewhere. Our composition scheme guide explains the conditions.
Step-by-Step Guide
Setting Up GST Billing for a Battery and Inverter Shop
Map your products
Batteries 8507, inverters and UPS 8504, dry cells 8506, all 18%. Keep EV chargers (5%) and solar system supplies separate.
Build exchange into your billing software
Bill the full price without exchange as the taxable value and show the old battery allowance below the tax total.
Write down your warranty arrangement with each brand
Free replacement from the brand, your stock billed to the brand, or a credit note. Each needs different entries and, for credit notes, a credit reversal.
Invoice scrap and generate e-way bills
Scrap is 18%. Generate an e-way bill for any movement above Rs 50,000, including returns to the brand.
Reconcile credit every month
Claim credit only after the distributor's invoice shows in GSTR-2B, and match brand credit notes against reversals before filing GSTR-3B.
Source: Notification 9/2025-CT(R); CGST Rules 7, 27 and 138; Circulars 195/07/2023-GST and 216/10/2024-GST; CGST Act Sections 22 and 34
Income tax: 44AD, cash sales and cash buys
Section 44AD. For FY 2025-26, a resident individual, HUF or partnership firm (not an LLP) can declare 6% of turnover received by bank transfer, UPI or account payee cheque (by the return due date) and 8% of the rest as profit under Section 44AD of the Income-tax Act 1961. The limit is Rs 2 crore of turnover, or Rs 3 crore if cash receipts are within 5% of turnover. From 1 April 2026 the same scheme is Section 58(2), Table Sl. No. 1, of the Income-tax Act 2025, with the same rates and limits.
Example: a proprietor's battery shop has FY 2025-26 turnover of Rs 1,20,00,000: Rs 1,10,00,000 by bank and UPI and Rs 10,00,000 in cash. Cash is 8.33% of turnover, above 5%, so the limit is Rs 2 crore and the shop is within it. Deemed profit is 6% of Rs 1,10,00,000 (Rs 6,60,000) plus 8% of Rs 10,00,000 (Rs 80,000), so Rs 7,40,000. Battery trading often runs on thin margins once you count warranty losses, transport and shop rent, so your books may show less than 6%. Compare both with your CA, and read our Section 44AD guide on the five-year lock-in before you opt out. If you stay on 44AD, advance tax is a single payment by 15 March (Section 408(2) of the 2025 Act for FY 2026-27).
Cash you receive. Under Section 269ST of the 1961 Act (Section 186 of the 2025 Act), you can't receive Rs 2,00,000 or more in cash from one person in a day, for a single transaction, or for one event. A housing society buying ten inverter sets can cross that easily. The penalty equals the amount received (Section 271DA of the 1961 Act; Section 451 of the 2025 Act).
Cash you pay. If you buy old batteries in bulk from garages or kabadiwalas, watch your own cash payments. A payment above Rs 10,000 in cash to one person in a day isn't allowed as a deduction (Section 40A(3) of the 1961 Act; Section 36(4) of the 2025 Act). Pay Rs 25,000 in cash for one lot of old batteries and the whole Rs 25,000 is disallowed. Our cash transaction limits guide covers both sides.
Common mistakes battery dealers make
- Charging GST on the price after the exchange discount. Rule 27 values the supply at the price without exchange.
- Charging GST on free warranty swaps, or not charging it on pro-rata amounts. Free replacement carries no GST; any amount the customer pays does.
- Keeping credit on batteries replaced against a brand credit note. Circular 195 links the brand's tax adjustment to your credit reversal.
- Billing a plain home inverter at 5% as "solar". Only the devices named in the renewable energy entry get 5%.
- Sending scrap without an invoice or e-way bill. Scrap is an 18% taxable supply like any other.
- Taking Rs 2 lakh or more in cash for one order. The penalty equals the cash received.
How Tax Garden helps battery and inverter dealers
We set up your HSN codes, fix your billing so exchange sales are valued on the full price, and match each brand's warranty method to the right entries and credit reversals. We file GSTR-1 and GSTR-3B every month through our GST return filing service, invoice your scrap sales properly, and at year end test 44AD against your books before filing your ITR through our ITR filing service. Call or WhatsApp us on 9640290977.
Related reading: GST and income tax for electrical goods shops, GST on electric vehicles and EV batteries, income tax for scrap dealers, GST and income tax for CCTV dealers and installers and the item-wise GST rates list.
