Looking for expert help with Income tax and GST for electrical goods shop owners India? 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
- Wires and cables, switches, sockets, MCBs, distribution boards, LED bulbs, light fittings, inverters and batteries are all 18% Goods and Services Tax (GST) from 22 September 2025 (Notification 9/2025-Central Tax (Rate), Schedule II).
- Solar panels, solar lamps, solar water heaters and electric vehicle (EV) chargers are 5% (Schedule I, S. No. 428, 437 and 438).
- A battery emergency light is 18%, not 5%. Only solar lamps get the lower rate.
- Wiring a house or office for a customer is a works contract, which GST treats as a service, not a counter sale.
- Under Section 44AD, deemed profit is 6% of digital receipts and 8% of cash. Moving contractor payments to bank transfer lowers it.
What is the GST rate on electrical goods in India? From 22 September 2025, most electrical goods attract 18% GST under Schedule II of Notification 9/2025-Central Tax (Rate): wires and cables (8544), switches, sockets and MCBs (8536), distribution boards (8537), LED lamps (8539) and light fittings (9405). Solar devices, solar lamps and EV chargers are 5% under Schedule I.
An electrical shop is simpler than most on GST. Nearly everything on the shelf is 18%. The work is in spotting the handful of 5% items, and in knowing when you've stopped selling goods and started doing a works contract. That second point matters if your counter also supplies electricians and builders, or if you send your own team to do the wiring. This guide covers which rate applies to what you sell for AY 2026-27, how to bill contractor jobs, and how your income tax is worked out.
What GST rate applies to what you sell?
Comparison
GST Rates for Electrical Shop Items (from 22 September 2025)
| Item | HSN | GST rate |
|---|---|---|
| Insulated wires, cables and flexible cords | 8544 | 18% |
| Switches, sockets, plugs, fuses, MCBs, lampholders, junction boxes (up to 1,000 V) | 8536 | 18% |
| Distribution boards and panels fitted with two or more switching devices | 8537 | 18% |
| Electric lamps, including LED lamps | 8539 | 18% |
| Luminaires and light fittings (battens, panels, downlights) | 9405 | 18% |
| Rechargeable emergency lights and torches | 8513 | 18% |
| Inverters, stabilisers and transformers | 8504 | 18% |
| Batteries (electric accumulators) | 8507 | 18% |
| Fans | 8414 | 18% |
| Plastic conduit pipes and fittings | 3917 | 18% |
| Solar power-based devices, solar lamps, solar panels (PV modules) | 84, 85 or 94 | 5% |
| Solar water heaters and systems | 8419 12 | 5% |
| Chargers and charging stations for electric vehicles | 8504 | 5% |
Source: Notification 9/2025-Central Tax (Rate), Schedule I S. No. 428, 437, 438; Schedule II S. No. 118, 401, 477, 480, 486, 508, 509, 511, 516, 614
Within your state you charge half as CGST and half as SGST, so 9% + 9% or 2.5% + 2.5%. To another state it's the full rate as IGST. None of these electrical items sit in the 40% schedule.
Fans, geysers, irons and mixers are also 18%. If you stock a lot of appliances, see our GST guide for electronics and home appliance shops.
Which items do electrical shops bill at the wrong rate?
With so few 5% items, the errors come from staff assuming something is "solar" or "green" when it isn't in the 5% entry. That entry (Schedule I, S. No. 437) lists renewable energy devices by name: solar power-based devices, solar power generators, solar lanterns and solar lamps, and photovoltaic cells whether or not made into modules or panels.
- Emergency lights. A rechargeable LED emergency light runs on its own battery. It's a portable electric lamp of heading 8513 at 18%, not a solar lamp.
- Inverters and batteries. A home inverter is heading 8504 and its battery is 8507, both 18%. The EV charger is the only 8504 item at 5%, because it has its own entry (S. No. 438).
- LED fittings. An LED bulb (8539) and an LED panel light (9405) are both 18%. LEDs as components (8541) are 18% too.
Say you sell a rechargeable emergency light for Rs 1,180 including GST. At 18%, the tax in it is Rs 180 (1,180 x 18/118). If it's billed under a 5% solar code, the invoice shows Rs 56 (1,180 x 5/105), and you've under-reported about Rs 124 on one sale. Set up each product with its own HSN and rate in your billing software so counter staff never choose a rate by hand.
For solar inverters, charge controllers and other parts sold on their own, check the HSN and rate on your supplier's invoice before you decide the rate. The 5% entry names devices and generators, not every item that's used with a solar system.
How should you bill electricians, builders and wiring jobs?
There are two very different kinds of contractor sale, and they're taxed differently.
You sell goods to the contractor. An electrician or builder buys wire coils and switches at your counter and does the job themselves. That's a sale of goods at the item rates above. If they're registered, put their GSTIN on the invoice so they can claim input tax credit (ITC). Many contractors will only buy from shops that give a proper tax invoice for this reason.
You do the job. If your shop takes a contract to wire a house, fit out an office or install a panel, and your materials go into the building, that's a works contract. Section 2(119) of the Central Goods and Services Tax (CGST) Act defines a works contract as a contract for installation, fitting out, repair or similar work on immovable property where property in goods passes in the course of the work. Schedule II, para 6(a) of the Act treats it as a supply of services. You don't bill the wire at 18% and the labour separately as if it were a counter sale; the whole contract is one service. Ask your CA for the rate and the SAC code before you quote.
Rooftop solar jobs have their own rule. Where the 5% solar goods are supplied together with certain services as one contract, the explanation to S. No. 437 deems 70% of the gross consideration to be the value of the goods (taxed at 5%) and the remaining 30% to be the value of the service.
A contractor buying more than Rs 50 lakh a year from you may also deduct TDS on purchase of goods if their own turnover is above Rs 10 crore. See our Section 194Q guide.
Step-by-Step Guide
Counter Sale or Works Contract? Check Before You Bill
Who does the installation?
If the customer or their own electrician installs it, you've sold goods. Bill each item at its own HSN and rate.
Is it fixed to a building?
If your team installs wiring, panels or fittings in immovable property and your materials go into it, it's a works contract under Section 2(119).
Treat a works contract as a service
Schedule II, para 6(a) of the CGST Act makes it a supply of services. Bill the contract as one service, not as goods plus labour.
Check for solar
For solar goods supplied with services in one contract, the S. No. 437 explanation splits the value 70% goods at 5% and 30% service.
Watch the composition limit
On the composition scheme, service income is capped at 10% of last year's turnover in the state or Rs 5 lakh, whichever is higher (Section 10(1)).
Source: Sections 2(119), 10(1) and Schedule II para 6(a), CGST Act 2017; Notification 9/2025-Central Tax (Rate), Schedule I S. No. 437
When do you need GST registration?
If you only sell goods, registration is required once aggregate turnover crosses Rs 40 lakh in most states. Telangana and several other states kept the Rs 20 lakh limit (Notification 10/2019-Central Tax). Selling to a buyer in another state needs registration from the first rupee (Section 24(i), CGST Act). Our GST registration service can set this up for you.
Regular scheme or composition?
Under the composition scheme, a trader pays 1% of turnover (Rule 7, CGST Rules), up to Rs 1.5 crore a year. You can't charge GST on your bill, can't claim ITC and can't sell to other states (Section 10(2)(c), CGST Act).
Electrical margins are often thin, and at 18% that matters. Take a fan bought for Rs 2,000 plus Rs 360 GST:
- Thin margin, sold at Rs 2,478. Regular scheme: GST in the price is Rs 378, you pay Rs 18 after ITC and keep Rs 100. Composition: you pay Rs 24.78 and keep Rs 93.22. The regular scheme leaves Rs 6.78 more.
- Wider margin, sold at Rs 2,950. Regular scheme: GST in the price is Rs 450, you pay Rs 90 and keep Rs 500. Composition: you pay Rs 29.50 and keep Rs 560.50. Composition leaves Rs 60.50 more.
For that Rs 2,360 cost, composition comes out ahead only above a selling price of about Rs 2,526. These per-item numbers leave out GST on rent and other expenses, which the regular scheme lets you claim as ITC, so run the comparison on your whole shop. The bigger point for most electrical shops is the customer mix. If electricians, builders and businesses make up a real share of your sales, they'll want a tax invoice to claim ITC, and a composition dealer can't give one. See our composition scheme guide for the full conditions.
How is your income taxed for AY 2026-27?
Section 44AD lets a resident individual, HUF or partnership firm (not an LLP) declare a deemed profit instead of keeping full books. The limit is Rs 2 crore of turnover, or Rs 3 crore where cash receipts are within 5% of total receipts. The deemed profit is 6% of receipts by UPI, card or bank and 8% of cash receipts. You can declare more than this.
Example 1 (Rs 1.5 crore turnover, new regime): A neighbourhood shop takes Rs 1.2 crore by UPI and card and Rs 30 lakh in cash. Cash is 20% of receipts, so the Rs 2 crore limit applies, and Rs 1.5 crore is within it.
- Deemed profit: 6% of Rs 1.2 crore (Rs 7,20,000) plus 8% of Rs 30 lakh (Rs 2,40,000), so Rs 9,60,000.
- Tax: 5% of Rs 4,00,000 (Rs 20,000) plus 10% of Rs 1,60,000 (Rs 16,000), so Rs 36,000.
- The Section 87A rebate covers income up to Rs 12 lakh. Tax payable: nil, assuming no other income.
Example 2 (Rs 2.8 crore turnover, new regime): A shop that sells mostly to electricians and builders takes Rs 8 lakh in cash (about 2.9% of receipts), so the Rs 3 crore limit applies. The other Rs 2.72 crore comes by bank transfer and UPI.
- Deemed profit: 6% of Rs 2.72 crore (Rs 16,32,000) plus 8% of Rs 8 lakh (Rs 64,000), so Rs 16,96,000.
- Tax: Rs 20,000 + Rs 40,000 + Rs 60,000 on the slabs up to Rs 16 lakh, plus 20% of Rs 96,000 (Rs 19,200). Total Rs 1,39,200. No 87A rebate above Rs 12 lakh. Add 4% cess of Rs 5,568. Tax payable: Rs 1,44,768.
If that shop's cash had crossed 5% of receipts, the Rs 3 crore limit wouldn't apply, and at Rs 2.8 crore it would need books and a tax audit.
Before you declare less than the Section 44AD figure, check the last five years. If you declared under Section 44AD in any of them, going below it now bars you from the scheme for the next five assessment years (Section 44AD(4)), and you'll need books and a tax audit if your income is above the basic exemption limit (Sections 44AD(5) and 44AB(e)). File ITR-4 for Section 44AD if total income is within Rs 50 lakh and other conditions are met, or ITR-3 if you file on books (a partnership firm files ITR-5).
See our Section 44AD guide and old vs new regime guide. If you also work as an electrician yourself, our income tax guide for electricians and plumbers covers that side.
Common mistakes electrical shops make
- Billing emergency lights or inverters as solar. Only the devices named in S. No. 437 are 5%. A battery emergency light is 18%.
- Treating a wiring contract as a counter sale. If your team installs the goods in a building, it's a works contract and a supply of services.
- Leaving the contractor's GSTIN off the invoice. Without it they can't claim ITC, and you may lose their repeat business.
- Going on composition with a contractor-heavy customer base. Composition dealers can't issue tax invoices, and builders buying in bulk want one.
- Picking the rate by hand at the counter. Map every item to its HSN and rate once in your billing software.
How Tax Garden helps electrical goods dealers
We set up your item master with the right HSN and rate for every wire, switch, light and solar product, then file GSTR-1 and GSTR-3B with contractor sales reported correctly. See our GST return filing service. We also compare composition against the regular scheme on your real margins, and prepare your ITR on Section 44AD or books; see our ITR filing service and pricing. If you also stock pipes, paint and tools, see our GST guide for hardware and paint shops.
