THOOTHUKUDI: Despite the GST on safety matches going down to five per cent from the earlier 12%, the rise in taxes of two important raw materials has taken the wind out of the industry’s sails.
Industry officials told TNIE that paper and cardboard, two vital raw materials, have now been shifted to the 18% slab from the previous 12%. The GST on other raw materials among 15 major components, including a few chemicals, remains the same.
However, manufacturers are of the view that they are unable to reap the benefits of the GST 2.0. They say that the suppliers of potassium chlorate (a key chemical component in matchboxes) have increased a flat `4,000 per tonne to cash in on the time. However, it can’t be attributed to the GST revision.
The match industry had been struggling with the price hike of various raw materials in the recent past and the labour shortage. The influx of cigarette lighters has only added to their agony in the domestic market.
Annarathna Group of Companies MD S M Antony Bharati told TNIE that paper and cardboard are the key raw materials for making inner and outer boxes, the tax rise of which (paper and cardboard) had balanced out the benefits of the GST reduction of matchboxes.
“The reduction of GST on flints to 5% will be helpful as flints are transported from Kerala and also imported from Belgium and Russia. The steep price hike of potassium chlorate was not anticipated; however, the cost of the matchboxes will remain the same,” he said.
Another manufacturer said the GST increase on paper and cardboard will definitely increase the input cost to an extent, despite GST on flints having witnessed a reduction. “The manufacturers are discussing to increase `10 to the base value of a bundle containing 600 matchboxes.
The GST revision will neither benefit the manufacturers nor the consumers, but only the traders,” he added. V S Sethurathinam, the former secretary of National Small Scale Safety Match Manufacturers Association, said, “The tax revision has not benefited the producers as the GST of two key raw materials has been hiked to 18%,” he said.
Despite increase in tax on two components, the cost of a bundle containing 600 safety matchboxes will remain unchanged at `280 to `320, and each matchbox will be sold at `1, said N Paramasivam, president of the association.
An official attached to Central Board of Indirect Taxes and Customs said the revisions of the GST are government policy. There will be advantages and disadvantages. It will reflect on the products, he said.