Bring energy efficient ACs in 18% slab under GST: Blue Star

NEW DELHI: Commercial refrigeration major Blue Star today demanded the five star energy efficient and inverter air conditioners be put in the 18 per cent tax bracket under the upcoming GST regime.

Besides, the company, which is a leading manufacturer of ACs in India, also suggested that units sold to government hospitals and educational institutions must be taxed at 18 per cent irrespective of their rating.

"We want the government to make it 18 per cent in Goods and Services Tax, which is revenue neutral," Blue Star Joint Managing Director B Thiagarajan told PTI.

Citing the example of China and Japan, he said the energy saving ACs must be encouraged through such tax incentives.

"Japan is now on 100 per cent inverter AC," he said, adding the government there gives subsidy in order to encourage the use of the energy saving air-conditioners.

The GST Council has already approved four-tier tax slabs of 5, 12, 18 and 28 per cent plus an additional cess on demerit goods like luxury cars, aerated drinks and tobacco products.

At present, the government levies an average 25.5 per cent tax on AC unit which consists central excise duty and state VAT.

Inverter ACs have introduced by manufacturers in the last 2-3 years and they are around 40 per cent more power efficient than the conventional air-conditioners. Inverter AC converts power into DC current and helps its compressor to change frequency according to the ambient load.

Highlighting the benefits of inverter ACs, he said they save 65 per cent power in comparison to one star AC and 40 per cent to a 5 star AC.

Thiagarajan further said: "This (18 per cent slab) should also be extended to the educational institutions and government hospitals as it could be tracked by GST numbers."

The company has lined up 135 models for this summer and is expecting an over 20 per cent growth in sales.

"We would continue to grow aggressively in the room AC business by 20 per cent and achieve 12.5 per cent market share," he said.

This season the company is expecting a good traction from non metro tier III, IV and V places.