Unexpected 28% GST on Plywood Industry: A Big Jolt for Middle & Lower Middle Class


Online Edition | India >
June 1st 2017 | Ghaziabad

New Delhi, May 24: Keeping the IIA’s request of imposing lower GST rates for items including Plywood, Flush door and Block board out of the way, government has kept plywood, boards and MDF in the 28% GST category, the highest in the GST tax category.


Effect on Middle and Lower Middle Class - The plywood is used as a basic requirement in building household and construction. When the GST will be effective, the price will increase which is like breaking backbone of the middle and lower middle class.

Effect on Employment - In the country like India, there are a large number of MSMEs (Ministry of Micro, Small & Medium Enterprises) that are involved in producing wood. But due to the highest GST rates, the cost of raw materials will increase thereby; manufacturers may apply the cost-cutting formula and layoff employees. In fact, a large number of workers will have to lose their jobs.

Effect on Raw Materials - When the high tax is imposed on raw materials, the price will increase. Simultaneously, there will be less demand of the product. It’s a direct hit on farmers.

To conclude, it is an urge to the GST council to review the policy and keep the plywood industry in the lowest slab.

Must-Know Facts Why a Jump in Organized Plywood Industry

GST Impacts

Reeling under the seventy years of indirect taxation framework, India is giving its way to ‘One Country One Tax’ regime i.e. Goods and Service tax (GST) from 01 July, 2017. According to industry experts, the GST regime may be the radical-change for the organized plywood industry. The market is dominated by the unorganized sector, which enjoys 70-75 per cent market share.

While the unorganized players hardly play any taxes which enable them to offer their products at cheaper prices,the organized industry pays 30 per cent taxes so their products are a bit costlier. With the implementation of GST, the scenario seems to change and the organized plywood industry may witness improved market.

There are several plywood manufactures that are reportedly looking for ways to expand their capacity and acquiring manufacturing units in the western and northern regions, where the demand is anticipated to come from.



Real Estate Demand

Given other reasons to the jump in the plywood demand is a rise in real estate demand and the Center’s plan to establish smart cities and other urban infrastructure projects. As against 5-6 per cent growth seen last year, it is expected to hit double-digit growth in the current fiscal year.

There are several plywood manufactures that are reportedly looking for ways to expand their capacity and acquiring manufacturing units in the western and northern regions, where the demand is anticipated to come from.