Plastic furniture predominantly used by poor and common people is set to cost a bomb post the implementation of the Goods and Service Tax (GST) from July 1 as the prices are projected to go up by a minimum of 12%.
But under GST, these products are levied with 28% tax, a straight 10.5 per cent increase in the tax burden. Given the extra costs due to monthly filings and other procedural issues, the overall additional financial burden on the account of GST is estimated to be around 12%.
The extra tax burden on small scale industries is far higher at 23% as they are currently exempted from the VAT in Andhra Pradesh and Telangana and so only pay the central excise duty of 5%.
“Before finalising the GST rates, the government has informed us that the tax implication will only be on the value additions and will be revenue neutral. However, our raw material is taxed at 18% and we have to pay an additional 10% tax due to mismatch in input and output tax”. Fearing significant drop in sales due to tax hike, he said the high tax will deprive poor people of basic furniture.