The Rs 40,000-crore corrugated packaging industry, dominated by MSMEs, has raised concerns over the GST structure effective from September 2025, under which the tax on kraft paper was increased to 18 percent  while the levy on finished corrugated boxes was reduced to 5 percent .
Corrugated Packaging Industry Flags GST Imbalance
Industry representatives said the inverted tax structure has led to a buildup of unutilised input tax credit, locking up manufacturers’ working capital.
The sector has over 15,000 MSME units supplying packaging for food, agriculture, pharmaceuticals, electronics, textiles, engineering goods and e-commerce.
MSMEs Seek GST Neutrality For Corrugated Packaging
ICCMA President said the GST cut on corrugated boxes benefited farmers but the higher tax on kraft paper created an imbalance, reported Businessline.
The industry is seeking GST neutrality, rather than concessions or incentives, arguing that the tax structure should not hinder value addition in manufacturing.
Rs 366 Crore Working Capital Estimated To Be Locked Monthly
Former ICCMA President said the current GST structure locks around Rs 366 crore in industry working capital each month, increasing borrowing and financing costs for MSME manufacturers.
Industry representatives said the GST refund process is time-consuming and documentation-heavy, with delays further straining cash flows for businesses operating on tight margins.
GST Refund Gaps Raise Investment Costs
He said input taxes on certain services and capital goods are not fully refundable, raising the cost of technology and capacity expansion.
Industry veteran said tax credits locked in the system could instead fund automation, technology upgrades, capacity expansion, employee development and exports.
The industry also highlighted corrugated packaging’s environmental benefits, citing its biodegradable, recyclable and renewable nature and role in a circular economy.
ICCMA Seeks GST Council Intervention
ICCMA Immediate Past President said the association has approached Finance Minister Nirmala Sitharaman, Finance Ministry officials, GST Council members, the GST Fitment Committee and state governments.
The industry has sought either a 5 percent GST on kraft paper or 18 percent on corrugated boxes, with full input tax credit. He said ICCMA will continue engaging policymakers and hopes for a rationalised GST structure.
