High GST impacting Electrical Sector

New Delhi, India – Indian Electrical and Electronics Manufacturers’ Association (IEEMA) has made a representation to the Government of India and the GST Council regarding high GST rates on electrical wires and cables. Presently, electrical wires and cables attract a GST rate of 28%, which is very high as compared to previous tax incidence of about 14%. IEEMA has requested the government to get these items reclassified under 18%. This huge gap between the rate of tax applicable on inputs and outputs is resulting in an effective increase of 14% in the working capital requirement by the manufacturers, leading to an increase in the cost of manufacturing. Sunil Misra, Director General, IEEMA, said “As electricity is kept out of GST, no input credit of GST paid on electrical products is available to electricity companies. This means a higher rate of GST is incurred on inputs resulting in higher cost of final product.”

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