GST Impact Rates Are Worrying Fan Manufacturers- Know Why

Indian fan industry has expressed its deep concern over the high Goods and Service Tax. This 6000-crore industry has been categorized in the highest slab bracket of GST, i.e. 28%. It has urged the government to reconsider the rates and revise it to 12% for the welfare of this sector.

Actually, fan has been categorized into consumer appliances in which rich products like air conditioners are also included. AC is a luxurious item and suited for the big pockets. It is not realistic to put air-conditioners and fan in the same group of taxation. There is no problem for rich consumers to pay extra on such luxury. But fan, being a non-luxurious and mass consumption product, should be excluded from the high tax bracket, said the chairman of The Indian Fan Manufacturers Association, Shri Rohit Mathur.

This apex body of fan industry represents almost all brands and manufacturers including Anchor, Bajaj, Crompton, Ortem, Havells, Luminous, Orient, Polar, Surya and Usha. The impact of GST will vary from three to eight percent. This immediate effect will depend on the location of manufacturer whether it is in the excisable or excise-free zone.

Association head Mr. Mathur further added that if GST is not decreased and the relaxations given by the government for special economic zones will not be applicable under the new tax regime, then it will cause a huge impact on the fan manufactures. He said that nearly 50 per cent manufactures are located in excise-free zones like Uttrakhand, Himachal Pradesh and NE states.

Presently, tax burden on manufactures operating from excise-free zone is nearly 20% while it goes up to 26% in other locations where excise is not exempted.

To dilute the impact of GST, manufacturers have to increase the prices from current levels by 4-5%. These are rough estimates which are considered if the government will not initiate any relief in GST rate. In this the industry with a total worth of Rs. 9000 crore, Rs. 6000 crore is contributed by the organised sector and this increase in the GST rate has put an extra burden on the manufacturers as well as consumers.