12% GST — Printers demand single slab

GST rate increases from 12% to 18%

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GST
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.

The Covid-19 pandemic led to the country-wide lockdown on 25 March 2020. It will be two years tomorrow as I write this. What have we learned in this time? Maybe the meaning of resilience since small companies like us have had to rely on our resources and the forbearance of our employees as we have struggled to produce our trade platforms.

The print and packaging industries have been fortunate, although the commercial printing industry is still to recover. We have learned more about the digital transformation that affects commercial printing and packaging. Ultimately digital 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.

Web analytics show that we now have readership in North America and Europe amongst the 90 countries where our five platforms reach. Our traffic which more than doubled in 2020, has at times gone up by another 50% in 2021. And advertising which had fallen to pieces in 2020 and 2021, has started its return since January 2022.

As the economy approaches real growth with unevenness and shortages a given, we are looking forward to the PrintPack India exhibition in Greater Noida. We are again appointed to produce the Show Daily on all five days of the show from 26 to 30 May 2022.

It is the right time to support our high-impact reporting and authoritative and technical information with some of the best correspondents in the industry. Readers can power Indian Printer and Publisher’s balanced industry journalism and help sustain us by subscribing.

– Naresh Khanna

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