Will the GST Council Resolve the Inverted Duty Structure for Notebooks?
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Synopsis
The GST Council's upcoming meeting may prove pivotal as it aims to address the inverted duty structure affecting notebooks and textbooks, which undermines recent tax cuts. This could restore financial balance for manufacturers and consumers alike.
Key Takeaways
- The GST Council is addressing the inverted duty structure for notebooks and textbooks.
- Current prices are impacted by an 18% GST on paper, affecting affordability.
- Two potential solutions include lowering the GST on paper or adjusting the tax slab for notebooks.
- Recent GST reforms have streamlined tax rates for better predictability.
- Industry associations support these changes for improved competitiveness.
New Delhi, Sep 26 (NationPress) The GST Council is set to tackle the inverted duty structure concerning notebooks and textbooks in its forthcoming meeting, as this issue has been undermining the advantages of the recent tax cuts.
Despite being exempt from the Goods and Services Tax (GST), the prices of notebooks and textbooks could still be elevated due to the 18% GST imposed on the paper used for their production. Manufacturers are unable to claim this as an input tax credit, which complicates the situation. This discrepancy escalates costs and increases final prices, according to sources familiar with the situation.
An inverted duty structure manifests when the GST rate on input materials is higher than that of the final product. This disrupts the credit chain, resulting in blocked input tax credits and elevated costs for both manufacturers and consumers.
Concerning the inverted duty structure affecting notebooks, an official mentioned that the government has taken note of this irregularity. The subsequent GST Council meeting is expected to rectify this issue.
The Council might deliberate on either lowering the GST on paper or moving notebooks into the 5% tax slab, both of which would restore the credit chain and alleviate price pressures, as per sources.
Led by Union Finance Minister Nirmala Sitharaman, the GST Council introduced significant rate rationalization this month, reducing tax slabs from four to two.
Numerous industry associations, including the Federation of Indian Chambers of Commerce & Industry, have praised the GST 2.0 reforms for enhancing predictability and transparency in India’s tax system and for addressing the inverted duty structure across various sectors.
They noted that correcting inverted duty structures in textiles, fertilizers, and renewable energy would lessen import reliance and boost the global cost competitiveness of Indian products.
Point of View
It is crucial to highlight that the GST Council's proactive measures to address the inverted duty structure reflect a commitment to improving the economic landscape. This approach not only aims to enhance the affordability of educational materials but also showcases the government's responsiveness to industry concerns, fostering a more equitable tax system.
NationPress
26/09/2025
Frequently Asked Questions
What is the inverted duty structure?
An inverted duty structure occurs when the GST rate on input materials is higher than that on the final product, leading to blocked input tax credits and increased costs.
Why are notebook prices high despite GST exemptions?
Notebook prices remain high because an 18% GST is levied on the paper used to make them, which manufacturers cannot claim as input tax credit.
How can the GST Council address this issue?
The GST Council may either reduce the GST on paper or move notebooks to a lower tax slab to restore the credit chain and reduce prices.
What recent reforms have been made in GST?
This month, the GST Council implemented significant rate rationalization, reducing tax slabs from four to two, aiming for a more streamlined tax system.
What impact do inverted duty structures have on industry?
Inverted duty structures raise costs for manufacturers, which can lead to higher prices for consumers and reduced competitiveness in global markets.
