State’s industries reeling from GST blow of higher tax

State’s industries reeling from GST blow of higher tax

SRINAGAR: Jammu and Kashmir’s industry sector, particularly manufacturing, has taken a serious hit since the Goods and Services Tax (GST) was introduced in the state. Muhammad Ashraf Mir, President of the Federation of Chambers of Industries, told Kashmir Reader there has been no manufacturing activity in the state since the GST regime was implemented on July 7. He said industrialists are not making any step towards manufacturing because the tax levied under GST is much higher than it was earlier.
Ashraf said that the state’s industries earlier received a remission on VAT (Value Added Tax), and in some cases, credit on excise, too. Now, he said, all that has gone.
“The industrialists used to get remission on VAT from the state government. The GST has no provision for this. As per the GST Act, the state can only reimburse the tax paid, but three months have passed and there is no communication from the government on this. If it is reimbursed, the industries will get relief; if not, all the industries of the state will die,” Ashraf said.
According to one of the economic survey reports, the industry sector constitutes nearly 24 percent of the gross state domestic product of Jammu and Kashmir. Construction material comprises most of the industries sector, followed by food processing. Due to the state government’s incentives, a number of industries had begun to pick up in the last two decades. One of them was the plywood industry. As per rough estimates, nearly Rs 50 crore of production of plywood was made every year.
Haseeb Renzu, General Secretary of the Kashmir Plywood Traders Association, said that the GST has made the plywood industries pay tax under various slabs, in addition to 5 percent freight charges. This, he said, has abolished the previous concessions on tax.
“The earlier concessions made this sector thrive in just a few years. Our products were cheaper than in the rest of India, and we easily managed to sell them both within the state and outside,” Renzu told Kashmir Reader. “Today, under the new tax regime, we have to pay more tax and that makes our products costlier. Why would a trader buy our products?”
“On average, an industrialist used to pay around 10 percent of tax in the old regime. In the new system, in the 28 percent tax slab, an industrialist has to pay 33 percent. In the 18 percent slab, the net tax payable is 23 percent,” Renzu said. “Except the 5 percent slab, all others have gone up. What can we do under these circumstances?”

 

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