Rimjhim Ispat MD, Yogesh Agarwal hails the Goods and Services Tax (GST) that has recently been implemented in India. The new tax reform aims to mutate India with its “One Nation, One Market, One Tax” motto by incorporating all indirect taxes with a simple tax on goods and services. He believes that this move is going to be a game changer for several industries, including the Indian steel industry. GST came in effect from July 1. GST is considered to be one of the biggest tax reforms in India, though it has received mixed reactions from businesses and consumers. However, experts say it is an asset because it will consolidate a host of complex taxes into one.
Yogesh Agarwal says, “The Indian metal industry has grown significantly to become the second largest stainless steel manufacturer in the world.” After July 1, only 5% GST is being charged on coal, iron and other key components of steel production.
Prashant Ruia, the Director of Essar Group says, “We are looking forward to the requirement of working capital to surge in the short term. But in the coming years, GST is expected have a beneficial impact on the steel sector and India’s economy.”
Before GST came into play, Value-Added Tax 5%, Excise duty 12.5%, and Central State Tax (CST) 2% were some of the taxes charged on steel products. The total comes down to 19.5% of tax, which was quite a lot. With GST in place, only 18% tax is applicable for stainless steel sheets, rods, and wires. An economical percentage of 12% has been set for household items, steel utensils, and instruments that are widely available in the market. Other goods like cookers, radiators, and appliances have been fixed at 28%, making them a bit costly.
Yogesh Agarwal, who is also the managing director of Rimjhim Ispat, explains that initially, modifications in the tax structure will be a backbreaker for the industry. This is due to the working capital requirement. However, it will lessen the overhead costs of logistics and raw materials needed in the production of steel, making GST highly profitable in due course.