The goods and service tax impact on ceramic tiles is basically neither too much high nor completely relaxed. Somany Ceramics Ltd., which is considered India’s third largest tile manufacturer, said that, even after the reduction in tax rates on tiles, the company is not expecting the disturbance created by the Goods and Services Tax (GST) to settle down in the second half of the fiscal year. GST on tiles is being levied at 18 percent.
After the implementation of Goods and Services Tax (GST) Regime, the complex rules and measures of new indirect tax reform have been influencing the key activities of the tiles industry. Abhishek Somany, Managing Director of Somany Ceramic Tiles, said, “The first six months were a complete washout.”
“GST rate on tiles had been slashed by the Council from 28 percent to 18 percent on 15th November 2017. The lower tax rates would not be beneficial to boost the revenue growth in the second half of FY. The kind of tailwind that we would have felt due to the rate cut will not be completely seen,” said the company. Due to the postponement of the implementation of e- way bills is another major drawback which is influencing the tiles industries. An e-way bill is an electronic invoice that can be used in transporting goods from one place to another.
According to Brokerage firm Edelweiss, it is anticipated that the tiles manufacturer will gain a 16.5 percent compounded revenue growth annually. The company disagreed with this and said that there is a need to add more products to the line which helps to enhance the growth of the company by FY 2019.
The company said that it outsourced 40 percent of manufacturing from other states and it is anticipated to maintain outsourcing in the following two-three years.
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It is assumed that the new tax reform will be painful only for upcoming six months and after that growth will be foreseen. The initiatives were taken by the government such as ‘Housing for All‘ will be enhancing the demand in near future. It is expected that the growth in tiles manufacturing industry will enhance in the coming year.