GST for Furniture Business 2026 – Rates, HSN Codes & Complete Compliance Guide

Introduction – GST for Furniture Business in India

The furniture industry is one of India's largest and fastest-growing sectors, encompassing everything from wooden furniture, metal furniture, and plastic furniture to modular kitchens, office furniture, and eco‑friendly bamboo and cane furniture. For furniture manufacturers, traders, showroom owners, and interior designers, GST compliance is not just a legal requirement but a critical business function that affects pricing, margins, and competitiveness.

With the rollout of GST 2.0 effective from 22 September 2025 following the 56th GST Council meeting, the tax structure for furniture has been significantly simplified. The earlier 12% and 28% slabs have been largely eliminated, and most finished furniture items now fall under a uniform 18% GST slab. However, eco‑friendly furniture made wholly of bamboo, cane, or rattan enjoys a special reduced rate of 5% GST.

This comprehensive guide covers GST for furniture business, GST rates on furniture, HSN codes for furniture, GST registration for furniture manufacturers and traders, Input Tax Credit (ITC) for furniture businesses, and all compliance aspects you need to navigate in 2026.

HSN Code Classification for Furniture – Complete Guide

HSN (Harmonised System of Nomenclature) codes are essential for correct GST classification and filing. Under GST, the correct HSN code determines the applicable GST rate. Furniture items are primarily classified under Chapter 94 of the GST tariff.

Detailed HSN 9403 Sub‑classification

HSN 9403 is the broadest classification covering most furniture items. Key sub‑codes include:

• 📌 940310 – Metal office furniture
• 📌 940320 – Other metal furniture
• 📌 940330 – Wooden office furniture
• 📌 940340 – Wooden kitchen furniture
• 📌 940350 – Wooden bedroom furniture
• 📌 940360 – Other wooden furniture
• 📌 940370 – Plastic furniture
• 📌 940380 – Bamboo, wicker, cane, rattan furniture
• 📌 940390 – Furniture parts

Important: Many businesses wrongly determine GST only by "material". In reality, GST depends more on HSN classification. One wrong HSN code can result in incorrect tax payment, leading to show‑cause notices, penalties, and interest.

Step‑by‑Step GST Registration Process for Furniture Businesses

Input Tax Credit (ITC) for Furniture Businesses – Complete Guide

Input Tax Credit is the cornerstone of GST that eliminates the cascading effect of tax. For furniture businesses with high‑volume raw material purchases, ITC is a significant financial benefit.

What ITC Can Furniture Businesses Claim?

• ✅ Raw Materials: Plywood, MDF, particle boards (18% GST)
• ✅ Raw Wood Logs: 5% GST
• ✅ Bamboo & Eco Boards: 5% GST
• ✅ Metal Hardware: Hinges, channels, handles (18% GST)
• ✅ Shop Expenses: Rent, electricity, maintenance, security services
• ✅ Transportation: Freight charges for inward/outbound logistics
• ✅ Advertising & Marketing: Brochures, digital ads, showroom signage
• ✅ Professional Services: Accounting, legal, GST return filing fees
• ✅ Capital Goods: POS systems, billing software, display racks, workshop machinery

Conditions for Claiming ITC – Section 16(2)

• ✅ Valid Tax Invoice: Supplier must issue a GST‑compliant invoice with GSTIN, HSN/SAC, and tax amounts
• ✅ Received Goods/Services: ITC can be claimed only upon actual receipt of goods or services
• ✅ Tax Paid to Government: Supplier must have deposited the tax with the government
• ✅ Filing of Returns: ITC must be claimed in GSTR‑3B by the due date (20th of following month)

ITC Restrictions for Furniture Businesses

• ❌ ITC Blocked on Immovable Furniture: Built‑in wardrobes, fixed partitions, false ceilings (immovable) – ITC is blocked
• ❌ ITC Allowed on Movable Furniture: Sofas, tables, beds, modular furniture – ITC is allowed
• ⚠️ Classification Tip: Do not capitalize interiors/furniture as "building" – classify under furniture & fixtures/plant & machinery

Important: Under the new Invoice Management System (IMS) effective April 2026, furniture businesses must verify supplier invoices in GSTR‑2B before claiming ITC. Mismatched invoices will result in ITC reversal with interest and penalty.

Reverse Charge Mechanism (RCM) for Furniture Businesses

Under Reverse Charge Mechanism (RCM), the recipient of goods or services is liable to pay GST instead of the supplier. For furniture businesses, RCM is applicable in the following scenarios:

• 📌 Goods Transport Agency (GTA): When availing transport services from a GTA, GST must be paid under RCM by the furniture business at 18%
• 📌 Legal Services: When procuring legal services from an advocate
• 📌 Import of Services: When importing services from a foreign supplier
• 📌 Unregistered Supplier: When purchasing from unregistered dealers (for specified goods)

E‑Way Bill Compliance for Furniture Businesses

• 📌 Applicability: Required for movement of furniture exceeding ₹50,000 in value
• 📌 Validity: 1 day for every 100 km (e.g., 300 km = 3 days validity)
• 📌 Exemption: Not required for goods transported within the same state (subject to state rules)
• 📌 Penalty: Transportation without e‑way bill attracts penalties up to ₹10,000 or tax evaded, whichever is higher

Penalties & Risks for Non‑Compliant Furniture Businesses

• ⏳ Late Filing Penalty: ₹50 per day (₹25 CGST + ₹25 SGST) for each day of delay in GSTR‑3B / GSTR‑1
• 💰 Interest: 18% per annum on unpaid tax liability
• 🔁 ITC Reversal: Wrongful availment leads to 100% ITC reversal + 18% interest
• ⚖️ Prosecution: Tax evasion above ₹5 crore attracts prosecution and arrest under Section 132
• 📩 Show Cause Notices: AI‑driven error detection triggering penalties under Section 122 – furniture businesses face higher scrutiny on HSN misclassification
• 🚚 E‑Way Bill Penalty: Transportation without e‑way bill – penalty of ₹10,000 or tax evaded, whichever is higher

Comparison: Regular vs Composition Scheme for Furniture Businesses

Related GST Resources for Furniture Businesses