The Indian Paper Manufacturers Association (IPMA) has stated that the importers of paper and paperboard get an additional benefit after the new GST slab rate comes into force from Monday and called for the imposition of IGST (Integrated Goods and Services Tax) of 18 per cent on import of paper.
The association argued that the domestic paper products, already under significant stress due to “predatory imports” of paper and paperboard entering the country at zero or preferential import duties, would further be more incompetitive.
“Given the move to reduce GST on uncoated paper and paperboard used for exercise books, notebooks etc, (HS Code 4802) to nil, the IGST Rate on imports will also be reduced to Nil. While domestic manufacturers will have to embed input taxes in the cost of manufacture, exports by foreign manufacturers to India will not be levied any IGST, leading to a further increase in imports,” IPMA President told businessline.
“While the GST Rate on pulp has been reduced from 12 per cent to 5 per cent, the GST rate on wood, which is the main raw material for manufacture of pulp, continues at 18 per cent. This will prompt higher import of pulp, adversely impacting the livelihood of the Indian farming community, and result in a significant outflow of foreign exchange,” he said.
The association submitted a memorandum to Prime Minister Narendra Modi, Finance Minister Nirmala Sitharaman and Commerce Minister Piyush Goyal, asking them to reconsider their decision and make the relevant changes to the GST structure, correcting the anomalies.
“This anomaly could jeopardise the existing investments as well as future investments in capacity enhancement,” he said.
He also expressed concerns about increasing the GST rate from 12 per cent to 18 per cent for different types of paper and paperboard grades. This will not only adversely impact the entire chain of downstream and user industries, but also impact the ultimate consumers with increased cost.
Notebooks to cost more
The reduction in GST rate to nil for uncoated paper and paperboard used for exercise books and notebooks will lead to a cost increase as manufacturers will become ineligible to avail input tax credit (ITC) on raw material and inputs, as well as services and capital goods.
“The manufacturers will have to necessarily embed the GST paid on their purchases in the cost. Exempting activities only in the intermediate/final product will break the ITC chain, resulting in an increase in costs,” he said.
Source from: https://www.thehindubusinessline.com/economy/notebooks-to-cost-more-even-as-gst-reduced-to-zero/article70076648.ece
