Telangana: GST puts granite units in a hard place

Hyderabad: Over 3,000 granite units in TS face closure due to the Goods and Services Tax which will come into force from July 1.

Two lakh workers are directly dependent on the granite industry and about five lakh indirectly. If the granite units shut shop, the workers will be out on the streets. The tax is at present 5 to 14.5 per cent; this will go up to 28 per cent in the GST regime.

There are 2500 small and 300 medium granite units in TS, a majority of them in the small scale sector.

Gayatri Group of Companies MD and president of the Granite Quarries Association, V. Ravichandra, said that the government was taking away a major part of the income of granite industries by way of royalty and income tax and now by levying a high GST.  

At present, 85 per cent of the granite units are listed as small scale industries (SSI) and are exempt from Central Excise duty up to a turnover of '1.5 crore. VAT (which will be replaced by GST) varies from five per cent to 14.5 per cent in different states. Under the new GST, all SSI units will come under excise limits and will have to pay 28 per cent tax.

Mr Ravichandra says if the government wants more revenue it must reduce the GST to at least 12 per cent and encourage the industry to increase its turnover.

He claimed that as granite is not a branded product, 85 per cent of its consumers are low or middle class and use cheap granite because it is easy to maintain and durable.

The granite industry has represented to Union finance minister Arun Jaitley that all processed items should be free from central excise duty and in view of this the GST for granite and marble has to be kept in the five per cent slab.

State government is levying tax on granite in various ways, such as royalty at Rs 2,000 per cubic metre, District Mineral Fund Tax (DMST) at 22 per cent on royalty, cess at 0.5 per cent on royalty and others.

The present market rate of granite raw material ranges from Rs 3,000 to Rs 10,000 per cubic metre. If all the above taxes have to be paid, plus the high GST, the selling price will have to be increased, which is almost impossible in the present scenario where competition from ceramic and other flooring material is high, said Mr Ravichandra.

He said many units will not be able to survive and will have to shut down as the increase in tax is two to five times the present rate.