Mitra writes to Sitharaman to change wagon GST

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State finance and industries minister Amit Mitra has urged Union finance minister Nirmala Sitharaman to correct the anomalies in the GST structure for the wagon business. Earlier, Mitra has written to the Union finance minister that the nature of an inverted duty structure is putting a vital manufacturing industry at risk, which employs lakhs of workers across the country. The wagon industry is also the sole supplier to the Indian Railways, producing up to 18,000 railway wagons per year. “I may mention that I had raised this serious issue at the 31st meeting of the GST council, following which the matter was taken up by the committee of officers for deliberation and placing their considerate views before GST council for further decision,” he added. Mitra explained that the genesis of the problem is the differential GST rate on inputs and the final product. Railway wagon and rolling stock are taxable at 5% whereas its major inputs like iron and steel, paints are taxable at a much higher rate at 18% and 28% respectively. As a result, there is an accumulation of input tax credit.

“In many such cases of inverted duty structure, the GST law has allowed refund of accumulated tax credit though it had initially being blocked. For instance, the GST council allowed refund of the inverted tax credit in respect of man-made fabrics although initially, the GST law restricted it,” he added. The sector produces 15,000-18,000 wagons per year. There are 21 wagon manufacturing units and 50 MSME (medium and small-medium enterprises) units spread across the country. It employs over two lakh people. Wagon manufacturers have demanded a revision of GST structure.“We are getting credit for 5% but we are paying 18-28% duty. The GST on wagon should go up to 18%,” said J P Chowdhary, chairman of Titagarh Wagons. An official of Texmaco also suggested that GST on wagon should go up to 18% level.

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