Electricity, Natural Gas out of GST will make steel mfg costlier, hurt MSMEs: Ex Prez CODISSIA

New Delhi, July 19 (KNN) Under the newly implemented Goods and Services Tax (GST) electricity as well as natural gas, two very important inputs are kept out of the new tax regime. This might result in the rise in cost of manufacturing of steel and will severely impact the Micro, Small and Medium Enterprises (MSMEs) of the sector.

Talking to KNN, D. Gandhikumar, MD of Gandhikumar Foundry and also the Former President of Coimbatore District Small industries Association (CODISSIA) explained the concern.

He informed that majority of the foundries in the country have electric furnaces installed for the manufacturing process. With the electricity being kept out of GST, it is going to have a negative impact.  Also natural gas being another important input for the industry is kept out of the purview of GST, which worsens the situation.

“Since these inputs do not come under the GST, the industry cannot avail the input tax credit, and the tax incurred in purchasing these inputs becomes a cost, this would shoot up the cost of manufacturing” added Gandhikumar.

He further said that treating electricity and natural gas like petrol and diesel is not in the best interest of any industry, especially the foundry industry as these units are totally dependent on operations that use a lot of both the inputs.

He however informed that coke being another important input for the foundries can be availed at 5 per cent GST, but there is a need to reconsider and bring the other inputs under the new tax regime.

Similar concerns were raised by the Steel Ministry earlier. According to reports, the Steel Ministry had also approached the Prime Minister’s Office in this regard. (KNN/ DA)