12% GST — Printers demand single slab

GST rate increases from 12% to 18%

GST rate increase by 12 to 18 % photo credit: newindianexpress.com

In a press release dated 21 September 2021, Kamal Chopra, president, All India Federation of Master Printers (AIFMP), stated, “It is a bit early to give any comments on the recent proposals submitted by the GST council before a proper notification is issued by the Government. But, still, I would like to say that on one side printers are happy that the long-standing demand for one trade one tax is accepted by the GST council, but on the other side, 18% GST on printed products can prove to be a big jolt for the already suffering printing and packaging industry.” We reproduce edited excerpts from the press release below.

GST bomb explodes — small printers got a setback

Previously, there were three slabs in the printing industry 5%, 12%, and 18% on different kinds of products. Printers of the country were facing a lot of confusion while calculating GST for different items. Requests were raised at various platforms for simple one GST for all the products of the Printing and Packaging industry.

With this proposal of the goods and service tax council though there may not be any confusion and anomalies while calculating GST for different printing products, 18% will definitely devastate the commercial printers, especially Micro and Small printers of the country, who are already on the verge of collapse, due to following facts –

  • The printing and packaging industry is an intermediator industry because supplies are not made directly to the end-users, but to the manufacturers/dealers who are preparing the products for the end-users. Thus, an increase in the rate will increase the manufacturing cost of the products.

  • The basic raw material of our industry – Paper is in the slab of 12% GST, putting printing and packaging in the slab of 18% virtually mean[s], payment of 6% from the pocket, after claiming the input credit, till the payment is received from the customer. In these days of slow business and delayed payments, sometimes more than 90 days, the additional 6% will be an added burden and difficult for the printer to survive. It may prove to be another death nail, especially for the micro and small printers of the country. When the input tax is 12% on our basic raw materials it is justified to equate the output tax at 12% to avoid such anomalies.

  • Printing of stationery, calendars, diaries, and books is/are already suffering. Some of the state governments have issued instructions for a paperless office. Again due to the Covid crises, the printing of newspapers and news magazines has also suffered a serious setback. It is evident that an increase in GST from 12% to 18%, in turn, increases the prices of books, magazines, etc. Thus, it is expected that the demand for printed products will further decrease in case this increased GST is imposed.

The printing business in India is crossing its fingers that things will improve after the GST is implemented. The current regime’s several levies and taxation points are having a negative impact on this sector’s growth. The printing industry, which is now suffering from a lack of working capital, is likely to profit from the GST regime’s easy flow of input credit. The time has come to prepare and begin the process of identifying potential challenges that may arise as a result of the GST transition.

As already reported by the media 27.3% of companies were on the verge of closure due to decreasing demands. With about 250,000 printers, India is the world’s largest printing industry. Of these, 90% of printers are either Micro or small and this increase will affect their survival now. It is therefore for the survival of the printing industry in India we wish that there may be only one GST slab of 12% on all/any kind of converting/printed products.

2023 promises an interesting ride for print in India

Indian Printer and Publisher founded in 1979 is the oldest B2B trade publication in the multi-platform and multi-channel IPPGroup. While the print and packaging industries have been resilient in the past 33 months since the pandemic lockdown of 25 March 2020, the commercial printing and newspaper industries have yet to recover their pre-Covid trajectory.

The fragmented commercial printing industry faces substantial challenges as does the newspaper industry. While digital short-run printing and the signage industry seem to be recovering a bit faster, ultimately their growth will also be moderated by the progress of the overall economy. On the other hand book printing exports are doing well but they too face several supply-chain and logistics challenges.

The price of publication papers including newsprint has been high in the past year while availability is diminished by several mills shutting down their publication paper and newsprint machines in the past four years. Indian paper mills are also exporting many types of paper and have raised prices for Indian printers. To some extent, this has helped in the recovery of the digital printing industry with its on-demand short-run and low-wastage paradigm.

Ultimately digital print and other digital channels will help print grow in a country where we are still far behind in our paper and print consumption and where digital is a leapfrog technology that will only increase the demand for print in the foreseeable future. For instance, there is no alternative to a rise in textbook consumption but this segment will only reach normality in the next financial year beginning on 1 April 2023.

Thus while the new normal is a moving target and many commercial printers look to diversification, we believe that our target audiences may shift and change. Like them, we will also have to adapt with agility to keep up with their business and technical information needs.

Our 2023 media kit is ready, and it is the right time to take stock and reconnect with your potential markets and customers. Print is the glue for the growth of liberal education, new industry, and an emerging economy. We seek your participation in what promises to be an interesting ride.

– Naresh Khanna

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