Looking for expert help with Income tax and GST for plywood and timber dealers 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
- Plywood, block boards, MDF, particle board, veneers, timber logs, sawn wood and wooden doors are all 18% Goods and Services Tax (GST) from 22 September 2025 (Notification 9/2025-Central Tax (Rate), Schedule II).
- Sawdust, wood chips and scrap, wooden pallets and packing cases, railway sleepers and bamboo flooring are 5% (Schedule I).
- GST 2.0 did not change the plywood rate. It was 18% before and it's 18% now.
- Timber attracts Tax Collected at Source (TCS) under Section 206C(1) at 2% from 1 April 2025, down from 2.5% (Finance Act 2025).
- Under Section 44AD, deemed profit is 6% of digital receipts and 8% of cash. Carpenters and contractors paying by bank transfer lowers it.
What is the GST rate on plywood in India? Plywood, veneered panels and similar laminated wood (HSN 4412) attract 18% GST under Schedule II, S. No. 159 of Notification 9/2025-Central Tax (Rate), in force from 22 September 2025. MDF (4411), particle board (4410), timber logs (4403) and sawn wood (4407) are also 18%. Wood scrap, sawdust and pallets are 5%.
Most of what a plywood depot sells sits at one rate: 18%. So the GST work is less about rates and more about who you sell to. Carpenters, interior contractors and furniture makers buy in bulk and want a tax invoice to claim input tax credit (ITC). Timber traders have an extra layer, because timber is one of the goods covered by TCS. This guide covers which rate applies to what you stock for AY 2026-27, when TCS applies, whether composition makes sense, and how your income tax is worked out.
What GST rate applies to what you sell?
Comparison
GST Rates for Plywood and Timber Items (from 22 September 2025)
| Item | HSN | GST rate |
|---|---|---|
| Plywood, block boards, veneered panels, laminated wood | 4412 | 18% |
| MDF and other fibre board of wood | 4411 | 18% |
| Particle board, oriented strand board (OSB) | 4410 | 18% |
| Veneer sheets up to 6 mm (other than for match splints) | 4408 | 18% |
| Timber logs (wood in the rough) | 4403 | 18% |
| Sawn timber, planks and scantlings | 4407 | 18% |
| Tongued, grooved or moulded wood, beadings | 4409 | 18% |
| Wooden doors, windows, frames, flooring panels (builders' joinery) | 4418 | 18% |
| Densified wood | 4413 | 18% |
| Resin bonded bamboo mat board, bamboo flooring tiles | 44 or any chapter | 18% |
| Adhesives and prepared glues | 3506 | 18% |
| Sawdust, wood chips, wood waste and scrap | 4401 | 5% |
| Packing cases, crates, pallets of wood | 4415 | 5% |
| Wooden railway sleepers | 4406 | 5% |
| Bamboo flooring | 4409 | 5% |
| Bamboo wood building joinery | 4418 | 5% |
Source: Notification 9/2025-Central Tax (Rate), Schedule I S. No. 294, 297, 299, 300, 303; Schedule II S. No. 75, 153 to 160, 162, 164
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 wood items sit in the 40% schedule.
The 56th GST Council meeting on 3 September 2025 cut rates on a long list of goods, but plywood, MDF and particle board weren't on it. If a customer asks why plywood didn't get cheaper after GST 2.0, that's the answer.
Hinges, handles, screws and other fittings are covered in our GST guide for hardware and paint shops. For decorative laminates and edge bands, take the HSN and rate from your supplier's invoice; this guide doesn't cover them.
Which items do plywood and timber dealers bill at the wrong rate?
With so much at 18%, the usual mistake is billing the few 5% items at 18% too.
- Offcuts, sawdust and scrap. A timber depot or sawmill that sells sawdust, chips or wood waste should bill it at 5% (heading 4401), not 18%. Charging 18% overcharges your buyer.
- Pallets and packing cases. Wooden pallets, crates and boxes are 5% (heading 4415). If you make pallets from your offcuts, map them separately from your plywood stock.
- Bamboo. Bamboo flooring (4409) and bamboo joinery (4418) are 5%, but resin bonded bamboo mat board and bamboo flooring tiles have their own 18% entry (Schedule II, S. No. 164). Check which one you actually sell.
- Veneers. Veneer sheets for match splints are 5%; all other veneer sheets up to 6 mm are 18%. For a plywood dealer selling decorative veneers, it's 18%.
Set up each product once with its own HSN and rate in your billing software so counter staff never choose a rate by hand.
Do you need to collect TCS on timber?
Section 206C(1) of the Income-tax Act 1961 lists goods on which a seller collects tax from the buyer at the time of sale. Timber is one of them. The Finance Act 2025 cut the rate for timber obtained under a forest lease, and for timber obtained by any other mode, from 2.5% to 2%, from 1 April 2025.
This applies to timber, not to plywood, MDF or board. If you're a plywood-only dealer, it doesn't come up. If you trade in logs or sawn timber, sit down with your CA and check:
- whether you fall within the section's definition of "seller"
- whether your buyer falls within one of the exceptions in Section 206C
- how you'll deposit the TCS and file the quarterly TCS return
Our TCS guide covers the full list of goods and how collection works. From 1 April 2026 the Income-tax Act 2025 replaces the 1961 Act, with new section and form numbers, so confirm the current references for FY 2026-27 sales.
There's also TDS on the purchase side. A furniture maker or contractor buying more than Rs 50 lakh a year from you may deduct TDS on purchase of goods if their own turnover is above Rs 10 crore. See our Section 194Q guide.
Step-by-Step Guide
Before You Bill a Bulk Order
Pick the HSN for each line
Plywood 4412, MDF 4411, particle board 4410, sawn timber 4407 at 18%. Sawdust 4401 and pallets 4415 at 5%.
Take the buyer's GSTIN
Carpenters, contractors and furniture makers need it on the invoice to claim ITC.
Check the place of supply
Delivery within your state is CGST plus SGST. Another state is IGST, and needs regular registration.
Timber sale? Check TCS
Timber is covered by Section 206C(1) at 2% from 1 April 2025. Plywood and board are not.
Large buyer? Check 194Q
A buyer with turnover above Rs 10 crore deducts TDS once their purchases from you cross Rs 50 lakh in the year.
Source: Notification 9/2025-Central Tax (Rate); Section 206C(1) as amended by Finance Act 2025; Section 194Q, Income-tax Act 1961
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).
Take a plywood sheet bought for Rs 1,800 plus Rs 324 GST:
- Thin margin, sold at Rs 2,200. Regular scheme: GST in the price is Rs 335.59, you pay Rs 11.59 after ITC and keep Rs 64.41. Composition: you pay Rs 22 and keep Rs 54. The regular scheme leaves Rs 10.41 more.
- Wider margin, sold at Rs 2,600. Regular scheme: GST in the price is Rs 396.61, you pay Rs 72.61 and keep Rs 403.39. Composition: you pay Rs 26 and keep Rs 450. Composition leaves Rs 46.61 more.
For that Rs 2,124 cost, composition comes out ahead per sheet above a selling price of about Rs 2,273. These numbers leave out GST on rent, transport and other expenses, which the regular scheme lets you claim as ITC, so run the comparison on your whole business.
For most plywood depots the customer mix decides it. Carpenters, interior designers, builders and furniture workshops want a tax invoice to claim ITC, and a composition dealer can't issue one. If they make up a real share of your sales, composition can cost you more in lost orders than it saves. 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 1.8 crore turnover, new regime): A plywood shop takes Rs 1.5 crore by bank transfer and UPI and Rs 30 lakh in cash. Cash is about 16.7% of receipts, so the Rs 2 crore limit applies, and Rs 1.8 crore is within it.
- Deemed profit: 6% of Rs 1.5 crore (Rs 9,00,000) plus 8% of Rs 30 lakh (Rs 2,40,000), so Rs 11,40,000.
- Tax: 5% of Rs 4,00,000 (Rs 20,000) plus 10% of Rs 3,40,000 (Rs 34,000), so Rs 54,000.
- The Section 87A rebate covers income up to Rs 12 lakh. Tax payable: nil, assuming no other income.
Example 2 (Rs 2.9 crore turnover, new regime): A depot that sells mostly to contractors and furniture makers takes Rs 10 lakh in cash (about 3.4% of receipts), so the Rs 3 crore limit applies. The other Rs 2.8 crore comes by bank transfer.
- Deemed profit: 6% of Rs 2.8 crore (Rs 16,80,000) plus 8% of Rs 10 lakh (Rs 80,000), so Rs 17,60,000.
- Tax: Rs 20,000 + Rs 40,000 + Rs 60,000 on the slabs up to Rs 16 lakh, plus 20% of Rs 1,60,000 (Rs 32,000). Total Rs 1,52,000. No 87A rebate above Rs 12 lakh. Add 4% cess of Rs 6,080. Tax payable: Rs 1,58,080.
If that depot's cash had crossed 5% of receipts, the Rs 3 crore limit wouldn't apply, and at Rs 2.9 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.
Common mistakes plywood and timber dealers make
- Billing sawdust, scrap or pallets at 18%. They have their own 5% entries in Schedule I.
- Leaving the buyer's GSTIN off the invoice. Carpenters and contractors can't claim ITC without it, and they'll buy elsewhere.
- Going on composition with a trade-heavy customer base. Composition dealers can't issue tax invoices, and bulk buyers want one.
- Ignoring TCS on timber. If you trade in logs or sawn timber, check Section 206C(1) with your CA before the year starts, not after.
- 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 plywood and timber dealers
We set up your item master with the right HSN and rate for every plywood, board and timber line, then file GSTR-1 and GSTR-3B with your trade 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. Many of your buyers are carpenters and furniture makers; our income tax guide for furniture workshops covers their side.
