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One need not pay GST on hearing aid. However, one will have to pay GST at the rate of 18 per cent for parts and accessories. Now, Karnataka’s Authority for Advance Rulings (KAAR) has also held the rate.
Experts advise businesses to choose right HSN (Harmonised System of Nomenclature) to avoid any dispute with tax authority.
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Questions raised
Bengaluru-based Sivantos India Pvt. Limited is engaged in the business of trading of hearing aids and their parts and accessories to the domestic market, which are manufactured by their parent company abroad, imported by the applicant, and are said to be suitable for use solely with the hearing aids. It moved to KAAR with three questions.
First, what would be the classification of parts and accessories suitable for use solely with the hearing aids. Second, what would be the rate of tax on supply of such parts and accessories,and third, whether such parts and accessories are exempted by virtue of exemption for the hearing aids.
As on date, the applicant is charging GST at the rate of 18 per cent on parts and accessories. However, it contended that the said parts and accessories are designed by their parent company to make them suitable for use solely with the hearing aids with no other alternate uses; hence, these are suitable for use solely with the hearing aids and accordingly, they are exempted “classifiable under heading 90219010 and are exempted from GST in terms of SI.No. 142 of Notification 2/2017-Central Tax (Rate) dated June 28, 2017.”
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Parts and accessories not exempted
After going through all the facts and arguments, KAAR said it is clearly evident from the entry no. 142 that the said entry covers only goods described as “hearing aids” and not the “parts & accessories of the hearing aids”. Thus “the entry is not applicable to the instant case,” it said while adding that the rate of tax applicable on supply of such parts and accessories of hearing aids is 18%.
Amit Maheshwari, Tax Partner, AKM Global, a tax and consulting firm said the ruling of AAR is clarificatory in nature. The notes to the relevant chapter clearly states that parts of hearing aids merit their classification in the respective heading only and hence, by implication, will not be subject to exemption, which is available for hearing aids and shall be subject to 18 per cent GST. “Classification of goods continues to be a vexed issue under the GST laws and the supplier of such commodities needs to be very careful while selecting the appropriate category or HSN code,” he said.
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