18% GST could push up paper price, Karnataka traders worried

BENGALURU: The Karnataka Paper and Stationery Traders’ Association has raised concern over the new Goods and Service Taxes (GST) rates on paper and paper products, warning that the move will escalate costs for manufacturers and consumers, especially students.

Addressing a press conference on Thursday, G Saravana Kumar, former secretary of Karnataka Paper Merchants and Stationers’ Association, said the GST Council’s recent announcement has created “serious confusion” in trade circles. “Paper and paperboards are taxed at 18 per cent, some paper products at 18 per cent, packaging materials at 5 per cent, while notebooks and textbooks fall under nil rate. This mismatch has left notebook manufacturers unable to claim input credit on raw materials,” he added

Saravana noted that manufacturers are forced to purchase paper at 18 per cent GST, but cannot set off the tax against sales since notebooks are exempt. “The 18 per cent paid on paper purchases, along with other input costs, gets added to the basic price of the final product. Stocks on hand as of September 21 will also have to be sold at higher prices to offset this loss,” he said.

Paper mills, he added, are unwilling to supply at Nil rate since they cannot determine the end use of paper. “This means notebook manufacturers must purchase at 18 per cent GST and then apply for refunds, which is cumbersome. Ultimately, the burden will fall on students and parents,” he said.