The Exercise Book Manufacturers Association has expressed serious concerns over an inverted duty structure following the recent GST rate rationalisation.
While the GST Council recently slashed the GST rate on books and notebooks to zero, the tax on paper and paper boards was simultaneously increased to 18%. According to the association, this discrepancy will push up production costs and create significant compliance challenges for manufacturers. Retail prices of notebooks could rise by 15-20%, they warned.
President of the Exercise Book Manufacturers Association (Maharashtra) highlighted that while books are tax-exempt, related products such as diaries, memo pads and registers remain taxable. He called for immediate clarification on Input Tax Credit (ITC) treatment in cases of mixed supply.
The Offset Printers Association added that the hike in GST on paper could force up to 30% of units to shut down, potentially increasing textbook costs for over 200 million students.
Paper boards are taxed at 18%, printing services at 5% and consumables like lamination, ink, gum and other raw materials also attract GST. Manufacturers said when such inputs are used for tax-exempt goods, ITC gets blocked. The use of the same machinery for producing both exempted books and taxable stationery further complicates ITC claims.
To resolve the issue, the association recommended a uniform GST rate of 5% on both paper and books. This, they argue, will prevent cost escalation, maintain steady demand and ensure students continue to access affordable educational tools.
The All India Notebook Manufacturers Association also cautioned that imported books and notebooks, which attract zero GST, will compete unfairly with domestic products burdened by high input costs. Increased imports of cheap paper from countries like China, Indonesia, and other ASEAN nations could further erode the market share of domestic MSME notebook manufacturers and printing presses, potentially threatening jobs and undermining the Make in India initiative.
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