GST on Cement

GST on Cement: In mergers and acquisitions, every single detail becomes important, and knowing more is always better than knowing less This article therefore seeks to provide readers with everything they need to know about M&As.

By virtue of the integration of the different indirect taxes in form of the Goods and Services Tax (GST) regime in India from 1st July, 2017, the taxation framework in relation to cement and other commodities was revolutionized. The government through the GST integrated most of some central and state indirect taxes with the intention of reducing the number of taxes through eliminating the tax on taxes.

Since cement is one of the most important construction material, it has profound effect on the cost of structures and accomodation for infrastructure purposes. Thus, the rate of GST on cement remains an essential consideration to effective and efficient functioning of the construction industry and the overall economy.

GST Rate on Cement

In accordance with the GST system, cement products are tasrtd as “28% GST”, this implies that a GST rate of 28% is charged on cement products sold in the market. This rate is for all kinds of cement, OPC, PPC and all others as the ministry does not distinguish between them.

I would like to stress that the 28% GST rate on cement is not a flat rate, while other consumer goods and services have either remained unchanged or have been reduced from the earlier implemented 6% rate. Instead, it comprises two components: the Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) or Integrated Goods and Services Tax (IGST) in case of an interstate supply.

The 28% GST rate is split as follows:The 28% GST rate is split as follows:

– CGST: 14%

– SGST/IGST: 14%

This makes it clear that if the supply is within the same state then the buyer has to pay both the Central GST of 14% and the State GST of 14% making the total amount to be paid to be 28%. If the transaction is done between two states, then according to the Integrated GST (IGST), the rate is 28%.

This paper mainly focuses on the effect of GST, or Goods and Service Tax, on cement prices.

The entry of GST on cement has also made its impact on the cement prices which is witnessed in Indian markets. Before GST, cement also fell under central excise duty, VAT, entry taxes and many more taxes as well in the country. The imposition of such taxes skewed leading to higher prices for the end consumer.

Input Tax Credit and Anti-Profiteering Measures New tax system mainly contains two features and one of the chief features of this new system is the Input Tax Credit which is defined briefly in words of law as under; – “The ‘Input Tax’ is the tax charged on any supply of goods or services or both, made or received by a registered person. The ‘Input Tax Credit’ means the credit of input tax available to a registered person under

Businesses are compensated through the ITC in the GST regime, which is considered one of the significant advantages of the system. Wheels: All registered dealers who manufacture cement can recover ITC on taxes paid on inputs including raw materials, capital equipment’s and other input services under the GST structure. This aids in the minimization of the total tax on the cement industry in addition to increasing its competitiveness.

That is why the government of India has installed the anti-profiteering measures in a bid to guarantee that the benefits arising from the GST would be felt by the consumer. These measures seek to discourage companies from flouting the ITC or lowering of tax rates by not translating the changes to consumer prices.

The anti-profiteering rules extend to the firm’s necessity to proportionately lower its prices of the goods and services provided in relation to the fall in the tax incidence caused by the implementation of the GST. Its violation entails certain penalties and other legal repercussions and that is why these rules exist.

Challenges and Concerns

Thus, analyse the effects of applying of GST on cement’s industry and consider related challenges and concerns: With regard to these challenges, perhaps the most significant is the perceived rise in compliance costs because of the extraordinary complexity of the GST regime for the cement industry, especially for small and medium enterprises.

There has also been issues of tax fraud and non adherence to the set ways, hence necessitating revenue losses to government. The authorities have implemented several policies to curb such instances currently with stricter enforcement and e-way bills to monitor the transportation of goods.

Future Outlook

The GST scenario has been quite dynamic and with the passage of time, there are more chances for further simplification and reduction in procedural complexities. Depending on the type of industry, there are specific concerns that have been raised over how the GST framework is going to be implemented in the industries; however, the government has not remained idle on this issue and is in the process of attending to some of the concerns that the industries raised especially the cement industry.

Also, amidst rising infrastructure the emphasis and affordable housing in India has become more pronounced therefore cement consumption has been projected to remain high.

Also, the expectation is that with budgetary thrust on Infrastructure and New Affordability Housing, the Cement demand is likely to sustain in India. The major components of the GST structure are important to extend great support to the cement industry and also the growth for the entire economy.

Conclusion

Taking into consideration changes in the specific areas of taxation for cement, the introduction of GST has led to profound alterations in the industry. Although the implementation of the 28% GST rate has led to some ranges including equalizing the tax percentages and the ITS facility and has resolved the burden of taxes, the industry has confronted some issues related to compliance and varying prices.

With the passage of time GST related to the cement industry shall be deemed to further amalgamate which in turn will provide a solution to the cement industry’s contention. That, only when the GST framework is set up correctly and effectively, can it enhance the whole economic growth process in the country with the regard to construction and infrastructure fields.