GST & Import Duty on Refurbished Servers in India

Quick answer: servers fall under HSN 8471, and as of 9 October 2026 the GST rate notified for that heading is 18% (9% central tax plus matching state tax, or IGST on inter-state sales). A GST-registered business can usually claim that tax as input tax credit (ITC) if it holds a valid tax invoice and meets the Section 16 conditions. If a dealer sells under the second-hand “margin scheme”, tax is charged only on the margin, and the buyer should not assume any ITC. Confirm with your CA.

This guide is written for CAs, finance heads, IT managers and SME owners who are about to buy a refurbished server and want the tax side clear before the purchase order. It explains the GST rate and the notification behind it, how a normal GST invoice differs from a margin-scheme sale, how ITC works for a registered buyer, what to check on the invoice, and why import duty rarely concerns a buyer who purchases from an Indian dealer. Every legal statement below is tied to an official source listed at the end. Where we could not verify a figure from an official source, we say so instead of quoting a number.

What is the GST rate on refurbished and used servers?

Servers are classified under HSN 8471, “automatic data processing machines and units thereof”. After the 56th GST Council meeting (3 September 2025), CBIC replaced the old rate notification with Notification No. 9/2025-Central Tax (Rate), dated 17 September 2025, in force from 22 September 2025 (a corrigendum followed on 18 September 2025). In the corrected text, heading 8471 appears at serial number 456 of Schedule II, which carries a central tax rate of 9%. With an equal state or union territory tax, that makes 18% in total; on inter-state sales the same total is charged as IGST.

Two points matter for buyers of refurbished equipment:

• The entry makes no distinction between new and used. The entry for 8471 in the notification text we read carries no condition for second-hand or refurbished goods. A used server in this heading is not taxed at a different rate just because it is used. What can differ is how the value is worked out, which is the margin scheme below.
• Rates can change. The GST Council revises rates, and a notification can be amended at any time. We found no 2026 change to the 8471 entry, but check the current CBIC rate schedule before you finalise a large order.

The sub-heading (the 6 or 8 digit code under 8471) that your seller prints on the invoice depends on the product, such as a server, a workstation or a storage unit. Ask the seller to state it and let your CA confirm it.

How does GST work on a normal invoice? A worked example

On a regular tax invoice, GST is charged on the full taxable value. The example below uses a round, hypothetical price of ₹1,00,000 for a refurbished server. It is an illustration of the arithmetic, not a quote.

So for a business that is registered under GST and uses the server in its taxable business, the 18% is largely a timing item, not a cost. For an unregistered buyer, a business making only exempt supplies, or a buyer whose ITC is blocked, the 18% is a real cost. Our refurbished vs new TCO guide shows how to put this into a cost comparison, and the price index states its figures excluding GST unless stated otherwise.

One more rule: if you claim ITC on the GST component of an asset, Section 16(3) says you cannot also claim income-tax depreciation on that tax component. Your CA will handle the books; just know the two do not stack.

Can I claim input tax credit on a refurbished or second-hand server?

Often yes, provided you buy on a proper tax invoice that charges GST. ITC is not decided by whether the server is new or used. It is decided by Section 16 of the CGST Act. Reading the text on the CBIC tax portal, a registered person can take credit of input tax on goods used or intended to be used in the course or furtherance of business, but only if all of these hold:

1. You hold a tax invoice (or debit note) issued by a supplier registered under GST.
2. The supplier has reported the invoice in their return and the details are communicated to you. In practice, the invoice must appear in your auto-generated GSTR-2B, and the credit must not be restricted there.
3. You have received the goods.
4. The tax charged has actually been paid to the government by the supplier.
5. You have filed your own GST return.

There is also a payment-timing condition. If you do not pay the supplier the value of the supply plus tax within 180 days from the invoice date, you must pay back the ITC with interest, and you can re-claim it once you pay. If you buy on an instalment or credit arrangement, track this date.

The best practical step is to reconcile each purchase invoice with GSTR-2B before you pay the balance. If the seller’s invoice does not show up, ask them to file. ITC rules are amended from time to time, so your CA should confirm the position on your filing date.

What is the margin scheme, and why does it matter to a buyer?

Second-hand goods have usually been taxed once already. To avoid taxing the whole value a second time, Rule 32(5) of the CGST Rules lets a person who deals in buying and selling second-hand goods pay GST on the margin instead of the full price. The rule text, as published by CBIC, applies where the dealer supplies used goods “as such or after such minor processing which does not change the nature of the goods” and where no input tax credit has been availed on the purchase of those goods. The value of supply is then the selling price minus the purchase price, and a negative margin is ignored.

The key conditions, in plain words:

• It is for dealers in second-hand goods. It does not apply to a seller who took ITC on the purchase of that stock.
• If the dealer took ITC when buying the equipment (for example from a company that supplied it on a tax invoice), the dealer cannot value the sale on margin for that item. It goes on a regular invoice at the full value.
• CBIC’s own explainer states that when the margin scheme is used, the buyer should not claim ITC on those goods.

Whether a particular seller uses the scheme is the seller’s choice (and may differ item by item), so as a buyer, ask. See the comparison below.

Illustrative example (hypothetical numbers). A dealer buys a used server for ₹60,000 with no ITC and sells it for ₹1,00,000. The margin is ₹40,000, so GST at 18% on the margin is ₹7,200. The dealer’s GST liability on that sale is ₹7,200. CBIC’s flyer says that when the margin scheme is opted for, the seller does not issue a taxable invoice and the purchaser does not claim ITC, so the buyer should not count on any credit. Compare that with the regular-invoice example above: ₹1,18,000 paid with ₹18,000 ITC, net ₹1,00,000. The lower tax number is not automatically the lower cost. Always compare the net cost after ITC. How a dealer presents a margin-scheme invoice varies, so treat this as arithmetic only and confirm the real invoice treatment with your CA.

What should be on a GST invoice for a refurbished server?

Rule 46 of the CGST Rules lists what a tax invoice must contain. For a business buyer, the points that matter most are below. Use this as a checklist before you pay.

• Supplier name, address and GSTIN, and a consecutive invoice number and date.
• Your name, address and GSTIN (check every character; a wrong GSTIN can block your ITC).
• HSN code and a description of the goods that matches what you receive: make, model, and quantity.
• Taxable value, rate of tax and the amount of tax, shown as CGST + SGST within the state or IGST between states.
• Place of supply and the delivery address, if different.
• Signature of the supplier, and where the supplier is required to e-invoice, a QR code carrying the Invoice Reference Number (IRN). The turnover threshold for e-invoicing is set by separate notifications that have changed over the years, so ask the seller whether they are covered rather than assuming.

Before you pay, also ask in writing:

1. Is this a regular tax invoice or a margin-scheme sale?
2. Will GST be shown separately, and will the supplier file it so it shows in my GSTR-2B?
3. Is ITC available to me on this invoice? (Your CA decides your final claim.)
4. Are accessories, extra RAM or drives billed in the same invoice with their own HSN and tax?
5. Does the invoice also cover warranty or AMC, and how is that service billed?

Serverwale states on its site that every refurbished server ships with a GST tax invoice, and its tower server page describes an itemised GST invoice. Whatever dealer you choose, ask the questions above, because the scheme a seller uses is something only the seller and their CA can confirm for your specific purchase. Our refurbished server buying checklist covers the non-tax checks, and the guide on dealers versus scrap vendors explains why a seller with proper billing is worth more than a cheap cash deal that leaves you without a valid invoice.

Is there import duty when I buy a refurbished server in India?

If you buy from an Indian dealer, you pay GST on the invoice as above. Customs duty is something the importer pays when goods enter India; it is already built into the dealer’s cost if the stock was imported, and does not appear as a separate line on a domestic GST invoice. So for most buyers, import duty is a background factor in price rather than a tax they file or claim.

If your company is considering importing a used or refurbished server itself, three things apply. We have not quoted a customs duty percentage because we could not verify a current rate from an official source, and rates change; your customs broker will compute them from the current tariff.

• Import policy comes first. DGFT Notification No. 23/2023 (3 August 2023) made import of specified IT hardware under HSN 8471, including servers, “Restricted”, so a valid import authorisation is required. Notification 26/2023 set the effective date as 1 November 2023, and Notification 38/2023 (19 October 2023) amended the conditions and exemptions. The exemptions are narrow, and the operating procedure is updated periodically.
• Used and refurbished goods may face extra conditions. We could not confirm the current second-hand import conditions from a primary DGFT source, so confirm with a customs broker or the DGFT before you commit to any import of used equipment.
• Duty is more than one line. In general, customs duty on an import is basic customs duty plus IGST (and any applicable cess) charged on the assessable value. A registered importer can generally claim IGST paid on import as ITC, subject to the usual Section 16 conditions. Your CA and customs broker should confirm the amounts.

The practical takeaway: for a small or mid-sized business, buying from a domestic dealer who handles sourcing and compliance is simpler than importing, as long as you get a valid GST invoice. This is also why refurbished sellers cannot simply ship “whatever is cheap” from overseas. Read our explainer on refurbished vs used vs open-box servers to understand what you are actually buying.

How do I compare a quote with GST in mind?

Ask every seller for the same three numbers: price before tax, tax amount, and whether you can claim ITC. Then compare net cost. The reference points on Serverwale’s own price index are stated exclusive of GST unless stated otherwise: it lists entry tower servers starting near ₹18,000 (indicative, as of the date shown on that page), so a quote of that kind would attract GST on top as per the invoice type. Final prices depend on stock, generation, configuration and quantity.

The same questions apply if you rent. A rental invoice is also a GST invoice; ask what is charged, whether ITC is available to you, and who bears the tax. Our rental vs ownership financial analysis and the pages on server rental in Delhi and NAS rental cover the cost comparison, and the GPU rent-vs-buy guide works through a short-project example.

What about selling or trading in old servers?

The same GST logic applies in reverse. If you are a GST-registered business and you sell an old server, the sale is a supply and may attract GST; how it is valued and whether you took ITC when you bought it are questions for your CA. Keep the original purchase invoice, the asset register entry and a record of data wiping. Our guides on selling an old server and server decommissioning cover the non-tax steps, and Serverwale’s exchange and upgrade page explains trade-in options.

Which Serverwale pages help me shop with these questions in mind?

Start with the full refurbished servers range, or go by type: tower servers for small offices, IBM rack servers, Lenovo servers, Supermicro servers and GPU servers. For what to expect from a tested machine after it arrives, see the post-delivery testing checklist and what refurbished means. For support after purchase, read how server AMC pricing works or the AMC page. Serverwale’s own policy page sets out its terms.

Not tax advice

This guide is general information, not tax or legal advice. GST rates, rules and customs policy change, and your position depends on your registration, your business and the exact invoice. Confirm with your Chartered Accountant before relying on any ITC claim or import decision.

Frequently Asked Questions

Get a GST invoice you can claim against

Tell us the server type and quantity, and we will send a quote. Ask us the invoice questions above before you order. Call or WhatsApp +91-87962-44410, or contact us for a quote on refurbished servers. You can also browse tower servers or compare the full price index.

Sources: CBIC — CGST Act, Section 16; CBIC — CGST Rules 2017, Rules 32(5) and 46; GST Council/CBIC — Margin Scheme in GST; Notification No. 9/2025-Central Tax (Rate), as corrected 18-9-2025 (ICAI copy); LiveLaw — DGFT Notification 23/2023; BDO India — DGFT amendments (26/2023, 38/2023). Prices and terms for Serverwale are taken from its published pages and are indicative. Position as of 9 October 2026.