--- title: "New GST on Industrial Machinery 2026: 18% Rate on Machinery" description: "New GST rate on industrial machinery in 2026 is 18% on all manufacturing and plant machinery. Let Busy handle GST billing accurately on every transaction." canonical: "https://busy.in/gst-rates/industrial-machinery/" author: "Apurva Maheshwari" published: "2025-07-22T05:37:52.000Z" category: "GST Rates" --- - The new GST rates for industrial machinery in India are mostly set at 18%, with lower rates for agricultural and renewable energy equipment. - Businesses can claim Input Tax Credit (ITC) on machinery used for business purposes, provided they are GST registered. - The government has simplified the classification of machinery under the HSN system to help businesses apply the correct tax rates. - The GST structure aims to encourage automation and modernization but may pose a high initial cost for small enterprises. - MSMEs can benefit from ITC if they comply with GST conditions, which helps reduce their effective tax burden. # New GST on Industrial Machinery: Slabs, ITC & MSME Effect Industrial machinery is a key part of manufacturing, production, and infrastructure development. From heavy equipment in factories to precision tools in small workshops, machines drive India’s industrial growth. But how are these machines taxed? In this blog, we’ll explore the [**GST**](https://busy.in/gst/) on industrial machinery, applicable GST rates, HSN codes, input tax credit eligibility, and how the tax structure impacts MSMEs and large enterprises alike. ## New GST Rate on Industrial Machinery in India The Government of India is updating GST rates effective after **22 Sep 2025**. Below are the **expected new GST rates** for common industrial machinery (no compensation cess). | Type of Machinery | Industry Use | New GST Rate | | --- | --- | --- | | General industrial machinery (plant & tools) | Manufacturing | 18% | | Textile machinery | Textile sector | 18% | | Printing machinery | Publishing, packaging | 18% | | Packaging machinery | Food, pharma, FMCG | 18% | | Agricultural machinery (e.g., threshers) | Farming | 5% | | Renewable energy devices & parts (solar, wind) | Green energy | 5% | Note: Under the updated structure, legacy **12%** items generally move to **5%**, many **28%** items move to **18%**; a narrow sin/luxury list sits at **40%** (not applicable here). ## Is GST Applicable on Industrial Machinery? Yes. Industrial machinery is classified as goods under the GST regime and is taxable at various slabs, primarily 18%. The rate may vary depending on the type of machinery, its purpose, and end use. The government has aimed to simplify classification under the [**HSN system**](https://busy.in/hsn/) , making it easier for manufacturers, importers, and dealers to apply the correct tax rate. ## Old GST Rate on Industrial Machinery ### (Old GST Rates – Applicable Until 21st September) | Type of Machinery | Industry Use | GST Rate | | --- | --- | --- | | General Industrial Machinery (Plant & Tools) | Manufacturing | 18% | | Textile Machinery | Textile Sector | 18% | | Printing Machinery | Publishing, Packaging | 18% | | Packaging Machinery | Food, Pharma, FMCG | 18% | | Agricultural Machinery (e.g., threshers) | Farming | 12% / 5% | | Renewable Energy Devices (solar, wind) | Green Energy | 5% | Note: Under the updated structure, legacy **12%** items generally move to **5%**, many **28%** items move to **18%**; a narrow sin/luxury list sits at **40%** (not applicable here). Live Demo Available Today ## Track Every Machine's Serial Number for AMC and Warranty Trusted by 6,00,000+ Users 4.6 Google Rating \* No credit card required ## HSN Codes for Industrial Machinery | Category | HSN Code | GST Rate | | --- | --- | --- | | General machinery & mechanical appliances | 8401–8487 | 18% | | Textile machinery | 8444–8453 | 18% | | Agricultural machinery | 8432–8436 | 5% / 12% | | Renewable energy equipment | 8541, 8501 | 5% | For full classification, visit our [**HSN code directory**](https://busy.in/hsn/) . ## Input Tax Credit (ITC) on Industrial Machinery One major benefit under GST is the availability of [**Input Tax Credit (ITC)**](https://busy.in/gst/input-tax-credit/) on the purchase of industrial machinery. Businesses can offset the GST paid on machinery against their output tax liabilities. - Machinery must be used for business or manufacturing purposes - Purchase must be supported by a valid GST invoice - Buyer must be GST registered - Machinery should not be exclusively used for exempt supplies ## Impact on MSMEs and Manufacturing Sector **Positive Impacts:** - Simplified tax structure: One nation, one tax has made machinery procurement transparent. - ITC benefit: Helps in cost savings for registered businesses. - Encouragement for automation: Easier taxation encourages modernization. **Challenges:** - Initial cost burden: 18% GST may be a high upfront cost for small enterprises. - Non-eligible ITC: If the machinery is used for exempted goods/services, ITC may be disallowed. Read more about [**GST impact on MSMEs**](https://busy.in/gst-rates/industrial-machinery/) and how proper planning helps in better compliance. ## Conclusion The GST on industrial machinery is mostly taxed at 18%, with exceptions for sectors like agriculture and renewable energy. While this may seem high, the availability of Input Tax Credit reduces the effective tax burden for businesses. For MSMEs and manufacturers, understanding the correct HSN codes, rate slabs, and ITC provisions can lead to better cost planning and improved productivity. **Get a Free Trial –** [**Best Accounting Software For Small Business**](https://busy.in/accounting-software/) ## About the author **Apurva Maheshwari** I am a Chartered Accountant with 5 years of experience specializing in GST, income tax, and HSN code classification. I help businesses with GST compliance, tax planning, and financial advisory, ensuring they meet regulatory requirements while optimizing their tax strategies. I aim to simplify GST filings, income tax laws, and HSN code classifications, helping professionals and business owners stay informed and compliant. ## Frequently asked questions ### What is the GST on industrial machinery in India? Most industrial machinery attracts **18% GST**, while some machinery like agricultural or renewable energy equipment may have lower rates. ### Can I claim ITC on machinery purchased for my factory? Yes, if the machinery is used for business purposes and you are **GST registered**. ### What HSN codes are used for industrial machinery? Generally, **HSN codes 8401 to 8487** cover various types of industrial machinery. ### Is GST applicable to second-hand industrial machinery? Yes, GST is applicable, but it may be under the **margin scheme** if the seller qualifies. ### Are MSMEs eligible to claim ITC on machinery? Yes, as long as they are **GST registered** and comply with ITC conditions. ## Related articles - [New GST on Skincare Products: Rate, Branding & Retail Pricing](https://busy.in/gst-rates/skincare-products/) - [New GST on Restaurant Meals: Dine-in, Takeaway & Delivery Compared](https://busy.in/gst-rates/restaurant-meals/) - [New GST on Kitchen Utensils: What’s Taxed and What’s Not?](https://busy.in/gst-rates/kitchen-utensils/) - [New GST on Online Education: Rate, Exemptions & EdTech Impact](https://busy.in/gst-rates/online-education/) - [New GST on Packaging Materials: Tax Implication Across Industries](https://busy.in/gst-rates/packaging-materials/) - [New GST on Digital Marketing Services: Tax Rates & Input Credit Explained](https://busy.in/gst-rates/digital-marketing-services/) - [New GST on Pesticides: Rates, Agri-Exemptions & Sector Impact](https://busy.in/gst-rates/pesticides/) - [New GST on Butter: From Dairy to Dining – What You Pay](https://busy.in/gst-rates/butter/) - [GST on Honey: Rate, Applicability & Industry Outlook](https://busy.in/gst-rates/honey/) - [New GST on Medical Equipment: Current Rates, Exemptions & Healthcare Impact](https://busy.in/gst-rates/medical-equipment/)