Installation Charges HSN Code: Understanding HSN Classifications for Installation Services
Installation services are common in daily business life. Examples include fitting air conditioners, installing CCTV cameras, setting up machines and wiring new equipment. Whenever a supplier charges installation fees, the correct installation charges HSN code must be used so that GST is applied properly.
In this guide you will learn how installation services are classified under HSN and service codes, how AC and camera installation are covered, what GST rate usually applies and how businesses can use these codes in their GST invoices and returns.
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What Is the Installation Charges HSN Code?
Under GST, most installation services are treated as services rather than as sale of goods. Services are classified using Service Accounting Codes which work like HSN codes for goods. Installation, repair and maintenance services that are not part of large construction work are usually grouped in the 9987 family.
The 9987 family covers maintenance, repair and installation services of various equipment. Within this family there are sub codes for installation services of machinery, office equipment, computers and communication equipment. Many general equipment installation jobs that are not linked with big civil construction are mapped to these 9987 codes.
Some installation services that are closely linked to construction of buildings and civil structures are grouped under another family that starts with 99546. This group covers electrical installation services, water and plumbing installation and heating, ventilation and air conditioning equipment installation for buildings.
In practice, the correct installation charges HSN code depends on what is being installed and whether the work is treated as a simple service or as part of a larger works contract. Still, both 9987 and 99546 families are the main starting points for classifying installation services under GST.
Installation Charges SAC Code Classification and GST Rates
Here are some commonly used HSN codes and GST rates for this category
4 Digit SAC Code Classification
| HSN/SAC Code | HSN/SAC Code Title | GST Rate |
|---|---|---|
| 9954 | Other construction services | 18% |
| 9987 | (i) Services by way of housekeeping, such as plumbing, carpentering, etc. where the person supplying such service through electronic commerce operator is not liable for registration under sub-section (1) of section 22 of the Central Goods and Services Tax Act, 2017. | 5% - No ITC |
6 Digit SAC Code Classification
| HSN/SAC Code | HSN/SAC Code Title | GST Rate |
|---|---|---|
| 995434 | Water well drilling services and septic system installation services | 18% |
| 995441 | Installation, assembly and erection services of prefabricated buildings | 18% |
| 995442 | Installation, assembly and erection services of other prefabricated structures and constructions | 18% |
| 995443 | Installation services of all types of street furniture (e.g., bus shelters, benches, telephone booths, public toilets, etc.) | 18% |
| 995444 | Other assembly and erection services n.e.c. | 18% |
| 995455 | Structural steel erection services | 18% |
| 995461 | Electrical installation services including Electrical wiring & fitting services, fire alarm installation services, burglar alarm system installation services. | 18% |
| 995463 | Heating, ventilation and air conditioning equipment installation services | 18% |
| 995464 | Gas fitting installation services | 18% |
| 995466 | Lift and escalator installation services | 18% |
| 995468 | Other installation services n.e.c. | 18% |
| 995469 | Services involving Repair, alterations, additions, replacements, maintenance of the installations covered above. | 18% |
| 998731 | Installation services of fabricated metal products, except machinery and equipment. | 18% |
| 998732 | Installation services of industrial, manufacturing and service industry machinery and equipment. | 18% |
| 998733 | Installation services of office and accounting machinery and computers | 18% |
| 998734 | Installation services of radio, television and communications equipment and apparatus. | 18% |
| 998735 | Installation services of professional medical machinery and equipment, and precision and optical instruments. | 18% |
| 998736 | Installation services of electrical machinery and apparatus n.e.c. | 18% |
| 998739 | Installation services of other goods n.e.c. | 18% |
* GST rates may vary based on the latest GST notifications and amendments
HSN Code for AC Camera and Other Installations
Air conditioner installation can be treated in two ways. When a technician only installs or services an AC that is already supplied, the service is commonly covered under an installation or repair code in the 9987 family or under the heating and air conditioning installation code in the 99546 group. When the same party sells and installs the AC under one contract, the tax treatment may follow composite supply rules where the main supply is the AC itself.
Camera installation, such as setting up CCTV systems in offices, shops and housing societies, is often treated as an electrical installation service. These services are generally placed under the electrical installation code in the 99546 family or under an appropriate installation or maintenance code in the 9987 group for communication and security equipment.
Other installations like fitting industrial machinery , office servers, computers and communication systems are usually mapped to specific installation sub codes inside 9987. Examples include installation services of industrial machinery, office and accounting machinery, computers and radio or television equipment. Each of these has its own detailed code, but all of them belong to the broad installation services group.
For small and medium businesses it is common to use a suitable six digit or four digit level from these families as the installation HSN or service code in billing software. Larger companies that follow detailed coding use the full eight digit service code exactly as given in the scheme of classification of services.
GST on Installation Services and HSN Code Classification
The GST rate for most installation services under the 9987 and 99546 families is generally 18% on the taxable value of the service. This standard rate applies in many cases to installation of ACs, CCTV cameras , industrial machinery, office equipment and other similar services when they are billed as separate service charges.
Some special entries in the rate notifications allow a concessional rate of 5% for certain notified installation or maintenance services where input tax credit is not taken or where the service is connected to specific government events or projects. These are limited cases and do not change the general rule that normal commercial installation services are taxed at 18%.
When goods and installation are supplied together, the GST impact depends on whether the supply is seen as a composite supply with one main item or as two separate supplies. For example, if a dealer sells an AC and charges a separate fee for installation on another invoice, the AC value is taxed under the AC HSN code and slab and the installation fee is taxed as a separate service at 18% under the relevant installation service code.
For GST compliance, businesses configure the correct installation HSN or service code in their accounting software for every type of installation service they provide. Invoices for installation services then show this code along with the GST rate and amount. During return filing, outward supplies of installation services are reported in HSN or service code wise summaries so that the tax department can see how much turnover was reported under the installation service categories.
On the recipient side, companies that pay installation charges for equipment, plant, machinery or office assets record the cost along with the GST charged. Where law allows, they can claim input tax credit on the GST portion, so long as the installation service is linked to their taxable business activities and the supplier has used the correct HSN or service code and filed returns properly.
Conclusion
The installation charges HSN code is an important link between practical installation work and GST compliance. Most stand alone installation services are grouped either in the 9987 family for maintenance, repair and installation of equipment or in the 99546 family for electrical and building related installations.
When businesses map each installation job to the correct code and apply the standard GST slab of 18% in normal cases, their invoices stay accurate and input tax credit flows smoothly for customers. This reduces the risk of disputes, interest and penalties that can arise when installation services are misclassified or taxed at the wrong rate.
