Goods and Service Tax to hit MSMEs hard in granite industry
The high percentage of Goods and Service Tax announced by the Union government is a big blow to the small and middle scale processing units in the granite industry. The government failed to consider the existing structure of taxes before announcing a single tax for all types of producers, laments the MSME industries owners and workers.
Ongole: The high percentage of Goods and Service Tax announced by the Union government is a big blow to the small and middle scale processing units in the granite industry. The government failed to consider the existing structure of taxes before announcing a single tax for all types of producers, laments the MSME industries owners and workers.
The granite industry in the state is concentrated in Prakasam, Guntur, Chittoor and Visakhapatnam districts. Prakasam district has abundant resources of black galaxy granite and a large number of workers from other states like Assam, Rajasthan, Kolkata, Uttar Pradesh, Chhattisgarh, Tamil Nadu, Madhya Pradesh, Gujarat and others with experience in the stone cutting and polishing industries there are working here.
Now there are about 400 granite companies with a holding of 1,200 mining quarries while the number of cutting and polishing industries reached 4,000 with more than 50,000 workers dependent on the granite industry in the district. The micro, small and medium scale industries, whose turnover is below Rs 5 crore pay 2 to 14.5 per cent of taxes depending on the unit size, raw material, and the product variety.
The large scale industries also pay 18 to 20 per cent of central excise tax in addition to the taxes paid by the MSME industries. Altogether, the government is getting about Rs. 120-150 crore in the name of royalty from the granite companies every year.Now, the Central government has announced 28 per cent of GST as a comprehensive indirect tax on the manufacture, sale, and consumption of vitrified tiles, ceramic tiles, marble and granite products across the country. Linga Ramakrishna Reddy, owner of Rajarajeswari Rocks and former general secretary of Bollapalli Growth Centre, said: “The Central government increasing the tax to 28 per cent is not practical.
To pay the increased tax, we need to increase the price of the product to 20 to 30 per cent which is not possible in the market conditions today. The decision of the government is only profitable to the large scale industries, who should pay a 20 per cent excise tax in addition to the input tax of 14.5 per cent. They get a relief of six to seven per cent and they are at liberty to reduce the price of the product. This unscientific decision of the government, applying same GST to all types of industries is a big mistake and it comes as a blow to the already struggling industry.”
The owners of small scale processing units from Chimakurti, Budhawada, Martur and other places met Ongole MP YV Subba Reddy and urged him to take the issue to the Central government and explain the effect on the MSME sector of granite industry. Also, the representatives from various associations are planning to meet the Finance Minister Yanamla Ramakrishnudu, who is also a member of the GST Council, to explain their problems before he leaved for the meeting on GST in New Delhi on June 3.