red-brick-makers-seek-removal-from-special-composition-scheme

The red brick-making industry has urged the government to reduce Goods and Services Tax (GST) rates on red bricks from the current 12 per cent to 5 per cent, and for the sector to be removed from the ‘Special Composition Scheme’ that attracts a GST levy of 12 per cent with ITC.

The GST Council had announced a restructuring of the four-tier indirect tax system on September 3, announcing instead a simpler two-tier tax system that comprises the 5 per cent and the 18 per cent tax slabs. 

The new rates that came into effect on September 22, however, did not include any changes to the Special Composition Scheme rates for red bricks, which attract 6 per cent GST and 12 per cent GST with ITC. It only brought sand lime bricks under the 5 per cent tax slab.

The threshold for GST levy is ₹20 lakh turnover for red bricks.

 

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Arguing that red bricks are also a key component for any construction project, brick industry representatives say the government should consider removing them from the Special Composition Scheme and tax them in the 5 per cent category to allow the makers to make room for increase in GST on coal, which has led to higher input costs for the kiln industry.

"Lowering GST on bricks will improve affordability for the common man who plans to construct an individual house, and also for the developers of housing projects," said Omvir Singh Bhati, General Secretary of the All India Brick and Tile Manufacturers Federation (AIBTMF), adding that bricks account for around 10 per cent of the total cost of construction of such projects.

While the GST on cement has been reduced to 18 per cent from 28 per cent, Bhati said workers are paid as per market rates, which adds to the high GST on coal.

The kiln industry employs around 3-4 crore people and their wages are at times more than the minimum wage criteria, Bhati added.

"We were facing a GST of 12 per cent. We were expecting a reduction in GST on bricks to the level of 5 per cent earlier. But in the GST council meeting, the government did not even consider our request. We have been put in a special composition scheme so the duty on bricks remains as it is (12 per cent)," he said.