Notebook manufacturers have appealed to the GST Council to take off their product from the “nil” GST rate and place it under the 5% bracket insisting that the latest rate change will make student notebooks costlier.
The rate changes, scrapping the 12% and 28% rates, will take effect on September 22 in what is being hailed as a major reform in the GST regime since its inception in 2017.
But textbook and notebook manufacturers say the key material which they use as input – paper – has moved from 12% into 18% slab, while the final product is ‘nil’-rated.
As per the latest notification, paper and paperboards and certain paper products are under 18% while packaging materials come under the 5% rate.
"If GST rates on paper are 18% and notebooks are Nil, how will notebooks manufacturers claim input tax credit, " Karnataka Paper Merchants and Stationery Traders’ Association (KPMSA) President Praveen Lunkad said at a press conference.
He added that if the notebook manufacturers are unable to claim the input tax, then the 18% paid on paper purchases plus the GST paid on other raw materials get added to the cost of the finished product, making it costlier.
According to their understanding of the GST laws and regulations, if a final product is ‘nil’ rated, they cannot claim input tax credit.
Sandeep Bhaskar, managing director, Bhaskar Group that manufactures notebooks and other stationery products told ET that with the changes, MSMEs will lose input credit, face higher costs, and struggle with working capital. “Unless the government gives a clarity input tax credit, many small notebook brands could go out of business,” he added. Saravana Kumar, former secretary of KPMSA, said there is a lot of ambiguity around the latest GST notification and the Council must clarify them at the earliest.
With the current rule notebook prices are set to increase by 15-20%, the notebook manufacturers said.
The Association urged the GST Council to clarify on the subject and levy a uniform rate of 5% on paper products without which paper product manufacturers across the country will face a major setback.
The rate changes, scrapping the 12% and 28% rates, will take effect on September 22 in what is being hailed as a major reform in the GST regime since its inception in 2017.
But textbook and notebook manufacturers say the key material which they use as input – paper – has moved from 12% into 18% slab, while the final product is ‘nil’-rated.
As per the latest notification, paper and paperboards and certain paper products are under 18% while packaging materials come under the 5% rate.
"If GST rates on paper are 18% and notebooks are Nil, how will notebooks manufacturers claim input tax credit, " Karnataka Paper Merchants and Stationery Traders’ Association (KPMSA) President Praveen Lunkad said at a press conference.
He added that if the notebook manufacturers are unable to claim the input tax, then the 18% paid on paper purchases plus the GST paid on other raw materials get added to the cost of the finished product, making it costlier.
According to their understanding of the GST laws and regulations, if a final product is ‘nil’ rated, they cannot claim input tax credit.
Sandeep Bhaskar, managing director, Bhaskar Group that manufactures notebooks and other stationery products told ET that with the changes, MSMEs will lose input credit, face higher costs, and struggle with working capital. “Unless the government gives a clarity input tax credit, many small notebook brands could go out of business,” he added. Saravana Kumar, former secretary of KPMSA, said there is a lot of ambiguity around the latest GST notification and the Council must clarify them at the earliest.
With the current rule notebook prices are set to increase by 15-20%, the notebook manufacturers said.
The Association urged the GST Council to clarify on the subject and levy a uniform rate of 5% on paper products without which paper product manufacturers across the country will face a major setback.
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