How GST is a Beneficiary Step for Steel Industry; read experts view on it.
SKS Ispat chairman, Anil Gupta, and the Indian Stainless Steel Development Association (ISSDA) deem the Goods and Services Tax (GST) to be a major game changer for the Indian steel industry. GST was implemented across the nation on July 1. Touted as one of the biggest tax reforms of the nation, GST has garnered mixed reactions from consumers and businesses. But overall, it’s considered an asset since it consolidates a legion of difficult taxes into one − an encapsulated and fixed dual tax system of state tax and center tax.
According to ISSDA President, KK Pahuja, India has grown remarkably in the metal industry to become the second largest stainless steel producer in the world. There’s only a 5% GST bracket on coal, iron and other major components of steel production. H Shiv ram krishnan, the Director of Essar Steel says, “We expect the requirement of working capital to go up in the immediate future. But going forward, GST will have a beneficial impact on the steel sector and the economy.”
Before GST, the taxes applicable on steel products were excise duty, Value-Added Tax, and Central State Tax (CST). These were respectively 12.5%, 5%, and 2%.The total adds up to 19.5% of tax, which is considered a lot to manage. Under GST, there will be an 18% tax on stainless steel sheets, rods, and wires. A cheaper percentage of 12% has been applied on steel utensils, household items and instruments that are easily available in the market. Radiators, cookers, and appliances have been marked at 28%, making them slightly expensive.
Anil Gupta, who is also the managing director of SKS Ispat, explains that the alteration in the tax structure will fall heavy on the industry and people initially. This is because of the working capital requirement. However, it will reduce the cost of logistics and raw materials used in the production of steel, making GST highly advantageous in the long run.