Hello friends, after the landmark change in India’s indirect tax regime, GST (Goods and Service Tax), all purchase managers have the question of its impact on Iron and Steel products. I am happy to share my understanding and perspective on the same.
I. Prices :
According to me, prices of steel products all over India should either remain same or come down as a result of abolition of multiple state and city taxes levied on movement of goods like CST, Entry Tax, Octroi, other Local Body Taxes. Earlier, the total taxes to consumer were about 18% i.e. Excise Duty 12.5% & Vat 6% on 112.5% of basic value which came to around 18.125 % as against the current 18% levied on steel items, hence it can be said that total tax is same as before GST regime.
Also basic prices excluding the taxes will come down due to free flow of credit offered in GST regime. In India, many a times excise duty credit was not taken by consumers as their suppliers didn’t have registration with Excise Department which now can be taken as there is only one tax.
Example: XYZ Ltd bought regular Mild Steel products from wholesale market, where supplier used to give Excise duty credit to XYZ Ltd. But in urgent small requirements, XYZ Ltd use to buy locally from a local dealer, this dealer being small in size couldn’t afford to maintain accounts separately for Excise Duty and hence was not able to pass the excise duty to his customers. Here XYZ Ltd, was at a loss of 12.5% which now won’t be the case and XYZ Ltd can take credit of full taxes paid on raw material.
II. Availability :
Earlier, due to CST levied on interstate transactions, many dealers were not able to stock products manufactured in other state due to obvious reason of cost disadvantage due to CST which could not be used as set off in the Tax liability and hence was added to the cost of the dealer. But now due to the new tax regime, dealers can stock products manufactured in other states as the cost disadvantage due to taxation is no more there. This along with improving competition will also increase availability of Mild Steel products in the market. This will not only help dealers but buyers alike as they can meet their project deadlines without worrying about availability.
III. Quality :
I believe that increased competition from other neighboring states will force local manufacturers to invest more in technology to improve quality and reduce cost thereby helping customers get better quality products.
I hope the above article helped you. Make comments in the comments section and feel free to discuss doubts regarding the same.
Agarwal Steel Corporation is a 30 years old company engaged in supply of Structural steel products to projects in India. ASC is headed by Mr. Vishnu Agarwal who has hands on experience of working with tight schedules and arranging products from all over India. For more information and enquiries you can mail us at sales@agarwalsteelcorp.com and our representative will get in touch with you for your requirement.
Thank You,
Ayush Agarwal
Co-owner at Agarwal Steel Corporation