Taxing Twists: The Notebook GST Dilemma

Notebook manufacturers have raised concerns over the recent changes in the Goods and Services Tax (GST) rates, pointing to a potential rise in production costs due to an inverted duty structure. They argue that, despite the government's aim to make notebooks more affordable for students, the changes could have the opposite effect.

The GST Council had opted to reduce tax rates on certain goods and services as of September 22. Notably, the council recommended a 'nil' rate for exercise books, graph books, and the paper used for them. However, this zero-tax policy makes it impossible for manufacturers to claim input tax credits, leading to potential cost hikes.

Industry bodies suggest all paper products, including notebooks, should either carry a 5 per cent GST or have a mechanism for full input tax refunds. The current market size for notebooks and exercise books is valued at approximately Rs 10,000 crore, with past GST rates of 12 per cent already affecting the sector.

(With inputs from agencies.)