Large commodity businesses do not have much to complain as the changeover to the GST regime has been smooth, said industry representatives. Preparations for the transition to the new indirect tax structure have been afoot for a while, they added.
Sugar mills in Tamil Nadu cheered the GST rollout, which did away with the 5 per cent VAT (value added tax) on sugar, putting the industry on an even keel with counterparts in other States.
However, there is a lack of clarity on sugarcane. Farmers have been exempt from having to pay GST, but sugarcane is yet to figure on the exempted list.
If five per cent GST is levied on the crop, the mills may face a reverse charge and have to shell out the tax. Although, in itself, this is not a dampener, but with electricity being kept out of the GST’s ambit, mills will not be able to claim input credit on cane used for generating power. About 20 per cent of the turnover can be attributed to electricity, and if the input credit is disallowed on this, they would lose about a fifth of the credit paid as tax on cane, said a senior sugar mill executive.
N Ramanathan, MD, Ponni Sugars, says the industry is well prepared for the shift to GST. But there are anomalies on biomass fuels. The industry has to identify the heads under which various items have to be classified. For instance, the industry uses a wide variety of biomass such as groundnut shells and coconut shells for fuel. But it remains to be seen if they qualify as firewood, he said.
Paper pause
There were absolutely no despatches on Saturday and Sunday said a paper dealer. Small businesses in this segment had been concerned over the shift to GST, particularly the transition of stocks between the previous VAT to GST regime. So they had cut down on pipeline stocks. “Life should come back to routine in stages from Monday,” a dealer said.