Indian producers demand rational tax structure

Indian producers demand rational tax structure
Published: 01 December 2008

With no room to hike prices as demand slips and fresh capacities coming up, cement manufacturers have urged the government to rationalise the tax structure for the industry in order to sustain the 10 per cent growth.

Despite being an essential infrastructure input, taxes and other government levies constitute 60 per cent of the ex-factory price of cement, making the building material the highest tax contributor among the commodities required for infrastructure. The industry pays around Rs 9,000 crore as excise annually to the government.

Plus, the value-added tax on cement is as high as 12.5 per cent, while that on steel is four per cent. Similarly, royalty paid by steel makers on iron ore (a high value product) is Rs 16/t, whereas the industry ends up paying Rs 45/t on limestone (a low value product).

In its pre-Budget memorandum (of which a copy is available with Business Standard) to the finance ministry, the industry said, “The government should take immediate measures to do away with such disparity in rates, to encourage investments in housing and infrastructure sectors, the main consumers of cement.” The industry, the world’s second largest after China, also wants simplification of the existing excise duty structure, which cement makers term as “very complicated”.