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Tread Rubber makers in Kerala, India seek changes in GST

The Annual General Body Meeting of All Kerala Tread Rubber Manufacturers’ Association, representing over 100 tread rubber producers, held on December 5, 2017, at Angamaly, Kerala, discussed the practical difficulties in running tread rubber business in the State in the context of Demonetisation and implementation of the GST which have impacted the sector most negatively. The association also demands composition scheme for the units under the GST regime. Under the scheme, turnover of all businesses (up to Rs 15 million) with same PAN has to be added up to calculate turnover for the purpose of composition scheme.

“The Association has decided to present a memorandum to the GST Council and the Kerala Finance Minister seeking to reinstate the exemptions which were provided to the small-scale tread rubber units in the State during the pre-Goods and Services Tax (GST) period,” said P P Subair-President of the Association.

“GST was envisaged as a ‘One Nation, One Tax’ regime. But now, we can not do business outside Kerala as it attracts inter-State tax. Though the tread rubber units are based in Kerala, where natural rubber is aplenty, the market for the products is outside the State, especially North India. Owing to demonetisation and GST, small traders are in deep crisis. In the pre-GST era, exemptions were given to companies with an annual turn over of Rs 15 million. Around 95% of our members fall into this category. But when GST came into effect, the exemption is gone and we are forced to compete with large corporates. Before July 1, 2017, the effective tax rate was 5%. But now this has been increased to 18%. Our demand is that inter-State purchase and sale should be allowed for firms with an annual turn over of Rs 15 million. Also, the turnover limit, which had been in existence for the past 15 years, has to be doubled,” explained P P Subair.

“The entry of big corporates into the tread rubber segment has become a major threat to the small players in the industry. The competition from the part of major tyre companies has been increasing since the introduction of GST. Under the new regime, small tread rubber units, which produce a meagre one-tonne rubber, and big corporates are treated alike,” Subair pointed out.

“The price of chemicals used in manufacturing tread rubber has increased manifold. But we can not increase product price in tandem with the rise in raw material cost as it will reduce our competitive edge. The import of cheap Chinese tyres is another challenge. Post demonetisation, the Construction sector in the country has come to a standstill. As a result, the demand for tread rubber has fallen drastically,” said Varkey Peter, Secretary of the Association.

The meeting re-elected P P Subair as President, K V Tolin, T G Chandrakumar and Paulson Thomas as Vice Presidents, Varkey Peter as Secretary, Hari Balakrishnan and Muhammed Rafeeq as Joint Secretaries and T R Jayachandran as Treasurer. The same State Committee will continue.

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