Indigenous handmade instruments are exempt
Entry 161 of Notification 10/2025-Central Tax (Rate) exempts indigenous handmade musical instruments as listed in Annexure II to that notification. The list runs to over a hundred named instruments, including sitar, sarod, tambura, santoor, sarangi, shehnai, bansuri, Indian harmonium with double reed, hand-pumped harmonium, shruti box, dhol, dholak, mridangam, pakhavaj, tabla, kanjira and chenda. An instrument that is not on the list, or that is factory-made or electronic rather than handmade, does not qualify. A music shop should therefore keep an item master that links each exempt item to its Annexure II name and treats everything else as taxable.
Guitars, keyboards and drums at 18%
Notification 9/2025 lists pianos (9201), other string instruments such as guitars and violins (9202), wind instruments (9205), percussion instruments such as drums and xylophones (9206), instruments whose sound is produced electrically such as keyboards and electric guitars (9207), and parts and accessories including metronomes and tuning forks (9209) in the 18% schedule. These rates did not change in September 2025. A drum kit, an electric guitar or a digital piano is therefore taxable at 18% even when sold alongside exempt tablas, and an electronic tanpura or electronic tabla machine does not qualify as a handmade instrument.
Accessories and cases
Musical instrument cases and gig bags fall under heading 4202 at 18%, and strings, picks, stands and similar parts and accessories under 9209 at 18%. When a guitar is sold with a gig bag in the same box for one price, the bag is generally incidental to the guitar, so the guitar's classification applies. When an exempt sitar is sold with a separately priced hard case, the case is a taxable supply on its own line at 18%. Selling an exempt instrument and a taxable case for one combined price would make it a mixed supply taxed at 18%, so always price cases separately.
Registration and credit on mixed shops
A shop that sells only exempt handmade instruments is not liable to register under section 23 of the CGST Act. Most music shops also sell guitars, keyboards and accessories, so they register once aggregate turnover, which includes exempt sales, crosses the threshold. They can issue an invoice-cum-bill of supply under Rule 46 for mixed sales to unregistered buyers. Input tax credit relating to exempt instrument sales must be reversed under Rule 42, so keep exempt and taxable turnover clearly separate on every bill. A rate-wise sales summary each month makes the reversal easy.