India’s Goods and Service Tax (GST) Council is likely to consider relaxations in the structure of tax paid onscrapand remove anomalies submitted by the domestic steel industry, government sources said on Friday, January 13.
The sources said that the next meeting of the GST Council scheduled for Friday, January 13, is expected to address the issues raised by steel producers.
Firstly, the Council is likely to favorably look at the steel industry demand for a reduction of the GST rate onscrapfrom 18 percent at present to five percent.
The ground for such a reduction has already been prepared by the ministry of steel which in recent communications to steel companies has sought increased use of steelscrapin the shift from iron ore, entailing a “cleaner and sustainable” steel production process.
The Council is also expected to address the issue raised by industry that the latter often has to sourcescrapfrom dealers unregistered in the GST system and steel mills are therefore unable to claim input tax credit against tax paid on the input.
Under the GST system, any producer can claim input tax credit on the final tax payable based on invoices from GST-registered raw material suppliers. But since unregistered raw material suppliers are not eligible to provide such invoices, finished goods producers suffer the cascading impact of levies, both at the input stage as well as the final product stage.