Hard Disk HSN Code: GST Applicability and Tax Slabs

Hard disks are important components in modern computing devices that are used to store data in personal computers, servers, and other computers. For businesses engaged in computer hardware devices, it is important to be familiar with the HSN Code and GST rates applicable on hard disks for tax compliance under India's Goods and Services Tax (GST).

HSN Code for Hard Disks

Hard disk drives are categorized under HSN Code 8471, which pertains to the Automated Data Processing Machines and Units thereof. This category encompasses computers, laptops and as well as their various storage devices. Hard disk drives (HDDs) and solid-state drives (SSDs) are classified as important storage devices within this code. The function of these drives is to store and retrieve digital data and are therefore regarded as an integral part of computing.

HSN Code:

8471

Description:

Computer storage devices, hard-disk drives (HDDs) and solid state drives (SSDs).

Scope:

Internal hard disk drives built into desktops and laptops.
External portable hard disk drives.
Solid-State Drives (SSDs) where speed increases access.
Hybrid drives using both HDD's and SSD's.

The classification under HSN code 8471 allows for consistency in taxation and allows businesses to comply with GST filing requirements. Hard disk drives are to be listed under the HSN code whether imported or domestically manufactured for the required invoice if they are not to be mistaken for the wrong HSN code category.

GST Rate on Hard Disks

The applicable GST rate for hard disks is determined by their classification under HSN Code 8471, which includes automatic data processing machines and storage units. The notifications from the GST Council provide that Hard Disk Drives (HDDs) and Solid-State Drives (SSDs) are considered standard storage devices of computers. GST rate is 18%. Applicability on Hard drives (internal and external), removable storage devices, solid-state drives, and other computer-associated storage devices. The 18% GST will be uniformly implemented across the nation, with no differentiation between states. This standardization will produce clarity from the aspects of the manufacturer, wholesaler, retailer, and end user, while also simplifying compliance.

Additionally, businesses that sell or purchase hard drives are allowed to claim input tax credit (ITC) on GST paid if they use computers for business purposes. This makes the cost of purchase more efficient for IT companies, hardware resellers, or corporate buyers, and benefits the supply chain. Another key point is that the correct GST rate leads to more than smooth transactions, avoiding penalties on the rate, returns mismatch, or disputes in audit. Accurate classification of hard disks under HSN Code 8471 with an 18% GST rate is important to smooth compliance for tax.

Refer here: Classification of Disc Pads and Brake Pads Under GST

GST Rate & HSN Code for Computer Accessories

HSN Code	HSN Description	GST Rate
84716050	Keyboard and Mouse (Wired/Wireless)	18%
84733099	Computer Parts and Accessories (Others)	18%
85044090	Laptop Adapters and Power Supply Units	18%
84717090	External Storage Devices (Pen Drives, HDDs)	18%
85238020	Memory Cards and Flash Drives	18%
85285290	LED/LCD Computer Monitors	18%

Input Tax Credit (ITC) on Hard Disks

Companies registered for Goods and Services Tax (GST) can claim Input Tax Credits (ITC) on hard disk purchases as long as they will be used for business purposes. Effectively, this taxable benefit allows businesses to set off the GST incurred on the purchased hard disks against their output tax liability, which reduces the overall tax burden. For example, an IT service provider can purchase hard disks in order to set up servers and subsequently use the ITCs towards its output tax on the services it provides to its customers. Further, a retailer or wholesaler of computer peripherals can use ITC accounting when the stock of hard disks is purchased for resale, facilitating working capital efficiency. However, ITCs can only be claimed by a buyer when:

The buyer is a GST-registered purchaser.
The buyer’s purchase invoice identifies the supplier’s GST Identification Number.
The hard disk purchase is being used for business-related activities (i.e., not for personal consumption).
The vendor has completed publicly available GST returns and the invoice appears in the purchaser’s GST return GSTR-2B.

By following both these conditions businesses can further enhance tax savings and maintain a transparent GST trail.

Importance of Correct HSN & GST Compliance

For companies that sell hard disks and computer hardware, it is important to utilize the proper HSN Code (8471), and apply the proper GST rate (18%). Wrong categorisation or wrong application can lead to many issues that you'd like to avoid:

Tax Penalties and Notices:

Misclassifying goods can impose penalties or interests, and may also lead to show-cause notices from tax authorities, resulting in unnecessary legal processes.

Errors in Filing of GST Returns:

Involvement of wrong HSN codes on GST returns can cause discrepancies in a monthly or annual tax return, leading to future filing corrections and amendments.

Mismatching identified by the Department:

Mismatching identified by the Department during audits or inspections can cause compliance issues, particularly when the invoices do not reconcile with returns and actual classification of the goods and/or services.

Loss of Input Tax Credit (ITC):

Misclassifying HSN can result in denial of ITC eligible claims, resulting in an effective increase of actual costs incurred for the business.

Damaged Business reputation:

Frequent issues and errors with GST compliance could create a negative impression with clients, partners and the tax authority that the business does not comply with the legislation.

Delayed Operations:

Inaccurate GST filing will mean a time-consuming process of reconciling, providing clarification, and following up with the department.

Making sure you have accurate HSN and compliant tax processes will provide businesses with the most tax compliant outcome, while also saving time, reducing risk, and supporting accurate cashflow reporting.

Hard Disk HSN Code & GST Rate Summary

Particulars	Details
HSN Code	8471
Product Description	Computer storage units – Hard Disk Drives (HDDs), Solid-State Drives (SSDs)
Applicable GST Rate	18%
ITC (Input Tax Credit) Eligibility	Yes, if purchased for business use
GST Impact on Buyers	Increases cost by 18% but allows businesses to claim ITC
GST Impact on Sellers	Must charge correct GST rate and use accurate HSN Code to avoid penalties
Common Errors in Compliance	Wrong HSN code usage, incorrect GST rate application, ITC mismatches

Conclusion

The hard disks and SSDs of a computer are categorized as HSN Code 8471, and fall under an 18% GST. If you run a business selling IT hardware, you will want to make sure your classification and compliance is correct so that you can claim ITC easily and avoid any delays in tax returns.