L Ramanathan: Print industry rues hike in GST from 12% to 18%

The 45th meeting of the GST council has proposed to increase the GST on print and packaging items from 12 to 18% on commercial print items, cartons, boxes, packing containers of paper, etc. The council while clarifying this increase has stated that this was done to remove ambiguity and a uniform rate of 18% has been proposed.

22 Oct 2021 | By PrintWeek Team

L Ramanathan: We will be heavily hampered with this hike in the GST tax increment of 18%

On behalf of the print and packaging industry in Tamil Nadu (and indeed all over India), I would like to present to you the following concerns which have a profound impact on us. Not just that. Increase in the GST rate from 12 to 18% will have a spiralling effect on the price of educational books due to the 18% rate. Since GST is not applicable to printed books, the prices will be impacted. Plus there will be an increase in the price of essential commodities like fruit, vegetable, many pharma items, food items, etc because of the hike in corrugated boxes and cartons.

The majority of the orders for a small and medium scale commercial printing press is sourced from tiny commercial printing needs. These are mostly small quantities of promotional materials like brochures, flyers, danglers, folders and bills. The other type includes invitations and other festival notifications. Small and medium companies and family firms are the source for this business. This activity in printing branches gives so many business opportunities both directly and indirectly.

80% of the revenue for a printing press is through this day to day commercial print transactions. All along this business line, we have managed with a tax rate of 5% to 12%. Both direct and indirect customers managed with these rates - and sustained the business across the towns and villages of India.

SME and MSME will be severely affected. I feel this increase will hit cash flow in the market. Due to the new GST development, many print customers will not be able to absorb this additional cost of finance. After the last two years of pandemic the print business has been impacted with severe losses. Lack of demand from end users has pushed the print industry to a stage of layoffs, loss of income, close down and heavy suffering. More than 45% price hike in raw-materials has crippled our business.

Now as the print and packaging was returning back to business activity; and when we expected a life-line within, this new revision of GST to 18% will have a debilitating impact on the industry. Needless to state it will further weaken our survival. In addition, this has coaxed many companies to move from conventional print advertising and traditional print campaigning towards the latest digital platforms. We will be heavily hampered with this hike in the GST tax increment of 18%.

We sincerely hope the government understands the pains our industry is going through. Kindly look into this request and consider re-visiting the new GST tax slab.

L Ramanathan, the managing director of Sree Vinayaga Screens from Madurai shares his views on the GST Council’s recent clarification on the scope of intermediary services, its exemption from 18 percent GST, and what it means for the print and packaging industry in the tier II and tier III cities across India