In a letter written to the government, Indian newsprint manufacturers have asked to clarify GST rules regarding newsprint, including the definition of newsprint, the condition of ‘actual user’ and producer and its applicability in the post-GST regime, and whether third parties can sell or buy newsprints.
Before the implementation of the Goods and Services Tax (GST), there were certain conditions on the buyer and seller for domestic newsprint. Only registered mills were allowed to produce newsprint and could sell it only to registered publishers for availing of concessional taxes, explained Vijay Kumar, secretary general of the Indian Newsprint Manufacturers’ Association. However, GST laws have no mention of conditions related to the ‘actual buyer’ for newsprint in India.
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Before GST, sales of newsprint to third parties was treated as a sale of regular paper and thus attracted different taxes. The confusion on actual user condition under GST has lead to misuse of the situation. As per reports, many third parties are actively selling and buying newsprint as there is no clarity on the authority buyer. This is further leading to evasion of tax.
There is 5% GST on newsprint and 12% on other grade paper. Since there is no clarity on actual user condition, third parties are successfully manipulating GST rates on their supplies.
Newsprint manufacturers have asked for clarification on the issue regarding GST applicability on authority newsprint and third parties. If there is separate GST rate on newsprint than other grade paper, third parties should not be allowed to sell or buy newsprint. And if there are no such conditions, the GST rate should be same for all grade of papers so that the exchequer doesn’t have to bear any losses.
Even though there were 124 paper mills in India at a time with the capacity to produce 2.2 million tonnes every year, only 32 are functioning presently and producing around one million tonnes a year. The drop in demand as a result of the growth in imports because of the global drop in newsprint prices.
