Despite GST rate cut, prices of notebooks to go up

BENGALURU: The recent GST revision has brought some relief to the common man, but it’s likely to increase the prices of notebooks and other essential items for students. The new GST rates on paper and paper products have caused confusion in the trade sector.

Although the government’s intention was to reduce prices of essential items for students, the implemented rules seem to have the opposite effect, according to the Karnataka Paper and Stationery Association.

The current GST rate structure:

Paper and paperboards: 18 pc GST

Certain paper products: 18 pc GST

Packaging materials: 5 pc GST

Notebooks and textbooks: 0 pc GST (zero-rated)

Notebook manufacturers have to pay 18 pc GST on paper purchases, but since notebooks are zero-rated, they can’t claim input tax credit. As a result, the tax paid on purchases will be added to the final product’s price.

If this situation continues, manufacturers may increase prices after September 21, affecting students and the education sector. To protect students’ interests, paper and paper products should be brought under a uniform 5 pc GST rate. Otherwise, notebook prices will rise, adding an extra burden to the education sector, those in the business suggest.

The GST Council should resolve this issue quickly and provide clarity. If not, it will be a significant setback for paper product manufacturers across the country, they added.

Bhaskar, a notebook manufacturer, said, “We have never faced such a dilemma before in GST payment. The GST increase on paper and paperboard is 18 pc. Now paper mills are not ready to supply papers without GST. They are demanding GST. When you are not able to claim GST, the cost will be increased by 18 pc. The end product will be expensive if the government does not provide clarity”.

Pramod Baldvar, a paper dealer, said, “Earlier, there was 12 pc GST on papers and customers have thought that prices on notebooks will come down after September 22. But instead, they will increase by 18 pc. It will burden students. There are a lot of confusions with notebooks in terms of GST”.