26 Sept 2025

GST on Fine Art: Benefits and Implications

The recent reduction of Goods and Services Tax (GST) on fine art (associated with HSN Code 9701) from 12% to 5% under India’s GST 2.0 reform, which came into effect from Sept 22, has been welcomed by artists, galleries, and collectors alike. At first glance, the move appears to be a positive step towards catalyzing the market towards increased growth. Normally, lower tax rates should translate into increased affordability, widen the market, and convert into higher sales volumes. However, it might be worth considering some of the implications which may play a part in the overall outcome.

GST Cut on Fine Art: Benefits and Implications, Art Scene India
Photo by Dannie Jing on Unsplash

Lower Prices, Higher Demand

Reducing GST to 5% directly lowers the cost of acquisition for buyers, making fine art more accessible to a wider demographic. This is particularly significant in a market where price sensitivity often deters first-time collectors and younger buyers. Galleries may benefit from increased footfall and transaction volumes, while artists also stand to gain both financially and from the exposure.

The reform is intended to broaden cultural consumption and support creative disciplines, and it does so by reducing the tax burden. With a lower GST rate, it could also perhaps encourage greater compliance and bring in more artists and dealers into the GST net.

Input Tax Credit

Subathra Mylsamy, Managing Partner and Lawyer, A.K. Mylsamy & Associates LLP breaks it down for us, "For much fine art when sold by its original creator, the GST Council has notified a concessional rate of 5%, but with a crucial caveat: the artist or gallery cannot claim ITC for the GST paid on the inputs. This 5% rate is specifically granted on a “without ITC” basis, as prescribed in Notification No. 1/2017-Central Tax (Rate) and subsequent updates. This creates a problem because artists often pay higher GST rates—sometimes 12–18%—on the materials and services comprising their input costs (such as paint, rent, insurance, and logistics). 

When the artwork is sold and ITC is not permitted, the GST paid on these inputs cannot be recovered, so it becomes a permanent additional cost for the artist or gallery. As a result, instead of passing the benefit of the lower tax rate to buyers, sellers typically increase their base price to compensate for the unrecovered tax, which ultimately makes art less accessible and harms both creators and buyers."

It implies that under the 12% structure, galleries and artists were able to offset taxes paid on inputs such as material costs, framing, logistics, printing and other services. Now, at 5%, this credit is no longer available, and which effectively increases the cost of creating art and the profit margins on sales.

Similarly, the inability to claim ITC could now influence gallery functioning and their profitability. Subathra Mylsamy expands, "For galleries, the inability to use ITC is even more pronounced because their operating costs— rent, curation, logistics, and insurance—are almost always taxed at 18%. When outward supplies can only be taxed at 5% and ITC is denied, the gallery experiences a loss that mainly affects smaller businesses. Larger galleries may have mechanisms to survive (by raising prices or absorbing costs), but smaller ones struggle, reducing opportunities for emerging artists and weakening the formal art ecosystem."

Is it better for the buyer now? "From a buyer’s perspective, the lower shown GST rate often does not translate into real savings, since sellers typically raise their base prices to offset tax stranded in the process. This cycle discourages formal transactions and record keeping, pushes smaller entities out of the market, and may lead to a shift back toward informal or cash-based deals—undermining transparency and trust in fine art as an investment asset," points out Mylsamy.

It leads to the question - in the long term, will it affect investment in infrastructure, promotion and marketing of art and thereby the ecosystem at large?

Compliance Factors

The shift in tax structure will require a recalibration of pricing strategies, and other modalities of functioning to optimize costs and profits.

Additionally, inter-state transactions involving integrated GST (IGST) remain complex, particularly for artworks crossing state borders for exhibitions or sales and these also have to be taken into consideration.

Overall, the GST reduction on fine art as part of a simplification of the GST brackets should help the art community, but moving forward the loss of input tax credit and increasing operational complexity must be factored in and thought out to ensure long-term sustainability of this sector. 


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