Match industry gets uniform GST

A prolonged fight to get a level playing field among match manufacturers has at last come to an end with the Union Government bringing the industry under uniform taxation by doing away with two different tax rates.

During the last Goods and Service Tax council meeting held on Saturday, the Government as done away with the classification of “hand-made” matches which was being taxed at a rate of 5% and other matches made either by partially mechanised or fully mechanised units were levied a tax at a rate of 18%.

“Now the GST has recognised our problem of two tax rates for the same product and has done away with 5% tax and reduced the GST from 18% to matches made by semi-mechanised and fully-mechanised units,” said a leading match manufacturer G. Athipathy.

All India Chamber of Matches has been fighting for over a decade to impress upon the Union Government that hand-made match industry did not exist any more and it was either semi-mechanised or fully mechanised.

“People were making matches using machinery but were claiming to be making hand-made matches only to get the tax benefit. This was leading to lot of tax evasion and thereby created a situation wherein honest tax-paying manufacturers were losing out their business to “so-called” handmade manufacturers,” Mr. Athipathy said.

Stating that those manufacturers who had declared themselves as using semi-mechanised or fully mechanised units were at a disadvantageous position as they had to pay a higher tax — 13% more than those who claimed to be making hand-made matches, he explained.

“With the end product being sold only for Re 1 a box of matches, it was only the manufacturers who were bearing the additional tax,” he said.

The problem that started even during CENVAT regime continued in GST regime too.

However, after the industry’s repeated plea, the Union Government studied the industry and understood that there were no more hand-made match units, Mr. Athipathy said.

Besides, on removing check-posts on State borders after introduction of GST, the misuse of “hand-made” matches increased manifold and the Centre also lost huge tax revenue.

“Now, that every manufacturer will be treated on par, tax-paying manufacturer will gain with the input credit. With an input credit of 7.5%, the actual tax paid by the manufacturer will be around 4.5%,” he added.

Representatives of the industry on Sunday thanked the Minister for Dairy Development, K.T. Rajenthra Bhalaji, as the State Government exerted tremendous pressure on the Union Government to solve the issue. Virudhunagar, Thoothukudi. Tirunelveli and Vellore districts were major contributors to the country’s match production.