New Delhi, Aug 4 (KNN) Responding to the reports of big bicycle manufacturers approaching the GST council for reducing GST rate on bicycle and parts, the Micro, Small and Medium Enterprises (MSMEs) involved in manufacturing bicycle and bicycle parts say that they are happy with the 12 per cent tax rate on their items. The rate shouldn’t be revised.

Talking to KNN, Rajeev Jain, General Secretary of United Cycles and Parts Manufacturers Association (UCPMA)  explained that recently there have been reports that some of the big companies have demanded a lower tax rate for the sector. This demand is fatal for the thousands of MSMEs that are engaged in the sector.

Explaining further, Jain added that the items that are required for making the parts and cycles are being procured at 18 per cent to 28 per cent. Since the industry is under 12 per cent tax slab, it is still fine to bear the difference.

But if it was to happen as some big companies are demanding, the MSMEs will suffer badly as there will be a huge gap in the tax rate.

Talking further, Jain informed that the MSMEs in the bicycle business work on a very compact budget, with lowering of the tax rate, a huge amount of capital will get stocked in the form of input tax credit, which is not in the best interest of the industry.

He said that the industry has recently started to get used to the new tax regime, a change in the tax slab is likely to have negative implications.

MSME associations  have submitted a memorandum to the GST council appealing that the tax rate shouldn’t be changed; instead other issues relating to the GST should be addressed.

It is one month into GST, still many of our items don’t have the HSN code, the GST council must get these things fixed instead of revising the rate, he added. (KNN/ DA)