Claims of notebook prices going up due to increased GST on paper is wrong and baseless: Read how notebook prices are set to come down
The Narendra Modi government introduced major reforms in the GST regime last month, reducing the number of tax slabs, and reducing taxes on a large number of products. This has already led to reduction in prices of various products, resulting in bumper sales during the festival season. However, confusion prevails regarding the GST on some items, and one of them is notebooks. Since last month, several media reports have been claiming that while the GST notebooks has been removed, its prices will actually go up. The reports claimed that while the GST on notebooks bas brought down to 0%, the GST on paper used to make notebooks has gone up to 18% from 12%. As the manufacturers can’t claim input tax credit if there is no GST on the final product, they will pass on the 18% GST on the raw material to the consumer, resulting in increased prices. The Economic Times claimed on 11 September that the nil GST on notebooks have caused anxiety on manufacturers because paper and paperboards and certain paper products are under 18% as per the latest GST rates. Moneycontrol also made a similar claim, adding that “the next GST Council will correct this anomaly,” quoting a government official. Several other media reports made the same claim. Free Press Journal even claimed that prices of notebooks have already increased due to increased 18% GST on paper. But the whole claim and the assertion is wrong and baseless, and is the result of not looking at the actual table of GST rates. While it is true that GST on several types of paper has gone up to 18%, that is not the case with paper used to make notebooks. In fact, the GST on uncoated paper used to make notebooks is also nil. That means, the price of raw material of notebooks have gone down, not gone up. As per the recommendations of the GST council published last month, the GST on ‘Uncoated paper and paperboard used for exercise book, graph book, laboratory notebook and notebooks’ under item code 4802 has been reduced from 12% to 0%. However, some complexity remains on GST on papers, as there are several categories with 18% and 5%. This includes 18% tax for some items under same item code 4802. The category 4802 has two sections, with paper for notebook coming under serial no 183 with nil GST. But there is a second category of papers under 4802 with serial number 184, which have 18% GST. This section says, “Uncoated paper and paperboard, of a kind used for writing, printing or other graphic purposes, and non-perforated punch-cards and punch tape paper, in rolls or rectangular (including square) sheets, of any size, other than paper of heading 4801 or 4803; [other than Uncoated paper and paperboard for exercise book, graph book, laboratory notebook and notebooks].” This means while the uncoated paper used to make ‘exercise book, graph book, laboratory notebook and notebook’ attracts 0% GST, if the same paper is used for ‘writing, printing or other graphic purposes’, this will come under 18%. There seems to be a bit of anomaly here, which is expected to be clarified by the GST council in its next meeting. But for now, it is clear that notebooks and exercise books are not getting costlier, as the paper used to make them are also not taxed, and therefore there is no issue of manufacturers not able to claim input tax credit.
The Narendra Modi government introduced major reforms in the GST regime last month, reducing the number of tax slabs, and reducing taxes on a large number of products. This has already led to reduction in prices of various products, resulting in bumper sales during the festival season. However, confusion prevails regarding the GST on some items, and one of them is notebooks.
Since last month, several media reports have been claiming that while the GST notebooks has been removed, its prices will actually go up. The reports claimed that while the GST on notebooks bas brought down to 0%, the GST on paper used to make notebooks has gone up to 18% from 12%. As the manufacturers can’t claim input tax credit if there is no GST on the final product, they will pass on the 18% GST on the raw material to the consumer, resulting in increased prices.
The Economic Times claimed on 11 September that the nil GST on notebooks have caused anxiety on manufacturers because paper and paperboards and certain paper products are under 18% as per the latest GST rates. Moneycontrol also made a similar claim, adding that “the next GST Council will correct this anomaly,” quoting a government official.
Several other media reports made the same claim. Free Press Journal even claimed that prices of notebooks have already increased due to increased 18% GST on paper.
But the whole claim and the assertion is wrong and baseless, and is the result of not looking at the actual table of GST rates. While it is true that GST on several types of paper has gone up to 18%, that is not the case with paper used to make notebooks.
In fact, the GST on uncoated paper used to make notebooks is also nil. That means, the price of raw material of notebooks have gone down, not gone up. As per the recommendations of the GST council published last month, the GST on ‘Uncoated paper and paperboard used for exercise book, graph book, laboratory notebook and notebooks’ under item code 4802 has been reduced from 12% to 0%.
However, some complexity remains on GST on papers, as there are several categories with 18% and 5%. This includes 18% tax for some items under same item code 4802.
The category 4802 has two sections, with paper for notebook coming under serial no 183 with nil GST. But there is a second category of papers under 4802 with serial number 184, which have 18% GST. This section says, “Uncoated paper and paperboard, of a kind used for writing, printing or other graphic purposes, and non-perforated punch-cards and punch tape paper, in rolls or rectangular (including square) sheets, of any size, other than paper of heading 4801 or 4803; [other than Uncoated paper and paperboard for exercise book, graph book, laboratory notebook and notebooks].”
This means while the uncoated paper used to make ‘exercise book, graph book, laboratory notebook and notebook’ attracts 0% GST, if the same paper is used for ‘writing, printing or other graphic purposes’, this will come under 18%. There seems to be a bit of anomaly here, which is expected to be clarified by the GST council in its next meeting.
But for now, it is clear that notebooks and exercise books are not getting costlier, as the paper used to make them are also not taxed, and therefore there is no issue of manufacturers not able to claim input tax credit.
