The demand to reduce ‘GST from 28% to 18% on Wood Based Panel products’ under chapter 44 is being raised again and again by trade associations. Repeated efforts and persuasion is close to bearing fruit as ‘GST slab is almost set for a reduction to 18% on 10th November, hopefully to be announced after GST council meeting in Guwahati. I am writing this on the basis of perceived intuition based on Government acknowledgement about the urgent need to lower the GST on many items from 28% to lesser slabs. Similar views have been expressed by wood panel trade associations and media reports in general.
Let us analyse the after effects if GST is reduced from 28 % to 18%.
The branded segment or the organised plywood segment will be further passing on the tax gain and plywood will be cheaper by another 10%. Small size plywood manufacturers will need lesser capital to keep as reserve for GST returns and payments. Plywood will be cheaper hence used by larger user base in different applications where the advantage was going to plastic or metal furniture. Dealers and retailers will also be happy to convince buyers on 18 percent tax which was very difficult in case of a Non-GST registered user.
The 18% slab on wood panel products will be a big relief and boost for businesses, for sure. Dealers may not hold their buying in uncertainty and begin lifting and stocking materials as usual. All this will ease up the scenario with positivity, create market movement, fresh demand and release some payment pressure too.
Plywood will be cheaper hence used by larger user base in different applications where the advantage was going to plastic or metal furniture. Dealers and retailers will also be happy to convince buyers on 18 percent tax which was very difficult in case of a Non-GST registered user. The 18% slab on wood panel products will be a big relief and boost for businesses, for sure. Dealers may not hold their buying in uncertainty and begin lifting and stocking materials as usual. All this will ease up the scenario with positivity, create market movement, fresh demand and release some payment pressure too.
It would have been great if ‘E-way Bill’ was also implemented for bringing transparency and thus level playing field could have been provided to building material businesses. The Laminate, ACP and PVC board has 18% GST from day 1 but the transparency and organised way of working (that was anticipated earlier) is not yet visible so far because of absence of E-way bill. Although the government’s effort in rationalising the GST filing process, improving upon technical glitches, simplifying return filing, cutting down bank transfer expenses and motivating everyone to buy after paying taxes by bringing input credit benefit for all businesses is a welcome step. Organised working is certainly required for every business to thrive and become competitive when businesses are turning global.
The scenario post 18% will offer a big boost for those mid-sized companies in Plywood, Laminates, ACP, WPC, Doors, Furniture & related products who have Vision, Infrastructure, Capital, Marketing road map to cross Rs 250 crore plus turnover in next 2-3 years. The mid-sized companies may feel sandwiched between top brands and locals but they have plenty of advantages geographically and they are young companies who are sharp, learning fast, personally involved, quick, decisive and flexible, with least overhead expenses. The mid-sized or semi organised companies have only one weakness – the present big opportunity may not last for long.
In future 18% GST slab can be considered to even 12% tax base, once the wood panel furniture segment start doing more formal business, and revenue to government grows because the basic raw material for this product is plantation based helping farmers to augment income, create employment and help the tree cover and environment. Let’s pray that 28 turns to 18 and sooner to 12.
Pragat Dvivedi
Founder Editor
Mail to “dpragat@gmail.com”, ( M) 9310612991