The Indore Paper Traders Association has urged the government to rationalise the GST structure on paper and related products by introducing a uniform 5% GST rate across all paper grades and converted items. The association stated that the current differential GST rates are causing compliance complications, blocking input tax credits (ITC) and raising operational costs for the paper and notebook industry.
Under the existing regime, paper used for notebooks and textbooks attracts nil GST, while the same grade of paper used for printing materials such as calendars, diaries or posters is taxed at 18%. This, the association said, has led to ambiguity in classification, disrupting supply chains and creating cash flow stress for small manufacturers.
"Paper mills often refuse nil-rate supplies without confirming the end use, forcing converters to procure paper at 18% GST and later claim refunds. This process increases working capital needs by 15-20% and disadvantages compliant businesses," said the association's taxation committee head.
The traders also criticised the 56th GST Council meeting's decision, which retained 0% GST on uncoated paper for notebooks and textbooks but increased the rate on coated and printed paper and boards to 18% from 12%, thereby worsening the inverted duty structure. According to the association, this policy inconsistency is hurting the printing, packaging and stationery sectors, making Indian manufacturers less competitive in global markets.
"It is practically impossible to determine the end use of paper at the point of sale. This ambiguity fuels malpractice and inflates production costs for notebook manufacturers," said the association's president, adding that a uniform 5% GST rate would simplify compliance, reduce disputes, and strengthen the domestic paper industry.
The association further cautioned that the prevailing disparity could enable foreign notebook manufacturers to dump cheaper products in India, undermining the Make in India initiative. The memorandum submitted to the government emphasised that a single 5% rate would restore parity across the supply chain, protect local mills and traders, and boost export competitiveness while aligning with the government's goal of promoting ease of doing business.
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