The Federation of Paper Traders Associations of India (FTPA) has urged the government to rationalise the GST on paper and paperboard products to a uniform 5% slab under Chapter 48, highlighting concerns over the inverted duty structure impacting the industry.
At the association's 64th Annual General Meeting (AGM) held in Chennai on Friday, the outgoing president of FTPA said that while the conversion of GST into a two-tier structure is a welcome move, the current tax disparity continues to burden the sector.
Currently, as per Finance Ministry statements, paper used for exercise books, notebooks and maps falls under the NIL GST slab, while paper used for calendars, diaries, posters, and stationery attracts 18% GST. Since the same type of paper can be used for both categories, the reversal of ITC for nil-rated goods is creating challenges for manufacturers and traders.
"The 18% GST on paper and 5% GST on many finished paper products is leading to an inverted duty structure, which exerts pressure on MSMEs. A uniform 5% GST across the board will simplify the value chain, from manufacturing to notebooks, packaging, and printing, while making the industry more efficient and growth-oriented," the outgoing president said.
The paper and paper products sector is considered one of India's key industries, directly employing more than 5 lakh people and indirectly supporting nearly 2 million livelihoods.
Sustainability & Industry Campaigns
The newly elected FTPA president announced that the association would launch campaigns to dispel myths around the sustainability of the paper industry. He stressed that the sector is one of India's largest recyclers and a pioneer in sustainable practices, contrary to the perception that it cuts forests indiscriminately.
According to FTPA data:
- 75% of paper in India is produced from waste paper recycling.
- Around 20% is sourced from wood and bamboo, mostly through farmer-grown plantations and social forestry initiatives by paper mills.
- The remaining 6-8% comes from agricultural residues, including wheat straw, paddy straw and sugarcane bagasse.
Industry stakeholders believe that aligning paper and paperboard products under a uniform 5% GST will not only ease compliance but also support MSMEs, boost growth, and reinforce India's sustainability goals.
CAclubindia
