Ferrosilicon industries in the dark about GST impact

Resulting in pending consignments to be exported


Most ferrosilicon industries are speculating how the imposition of Goods and Services Tax (GST) would impact them.

Without concrete knowledge on the implications, they are wondering how export of their product will be affected post-GST. The Indian government since July 8 imposed 5-18% GST on the export of raw materials from India.

Most of the raw materials for ferrosilicon industries fall under 5% GST. However, since taxes are also levied in the Indian states, these industries are in a state of confusion.

“The Indian government is imposing one tax slab but tax paid to the state governments is confusing us. We cannot say what this means for us until the materials reach us,” said Senior General Manager (Purchase) of Bhutan Ferro Alloys Limited (BFAL), Nakphay Wangchuk.

The state government still levies cess when these industries procure the materials. A cess imposed by the central government is a tax on tax, levied by the government for a specific purpose. Generally, cess is expected to be levied till the time the government gets enough money for that purpose.

For example, a cess for financing primary education – the education cess (which is imposed on all central government taxes) is to be spent only for financing primary education and not for any other purposes.

Since July, BFAL has not yet received any raw material supplies. Also, not a single consignment has moved out of the country since then. BFAL’s Manager said that the company is yet to see changes in the prices of raw materials. “They have not said anything and we are also waiting,” he said.

But some suppliers have sent GST code, which they will be using in their bills to claim refund. The GST law states that GST is refundable on exported goods authenticating the products have reached the destination. The possible impacts are still under speculation and companies are planning to act once the impacts are actually felt.

The industries pay 10% Bhutan Sales Tax (BST) for the import of goods from other countries. If refund of GST is applied to raw materials, prices of finished products are expected to remain the same. Only transportation costs might be affected.

Due to GST, some companies have not exported a single consignment till now. Some consignments are still stranded in Jaigaon due to technical issues. Ugyen Ferro Alloys has also not sent a single consignment since July 1. The company is waiting for the customs at Jaigaon to settle. “Otherwise, there are chances of our consignments remaining stranded on the way,” said Commercial General Manager Manush Sharma.

Authorities said that to promote smooth trade flow, all the stakeholders need to be aware and adhere to GST provisions starting from manufacturer till consumer. Also, the customs officials and transporters need to be ready to complete formalities mandated in the system to promote trade. Absence of GST registration numbers for the transporters is another challenge for the industries.

Some industries said they are observing closely and will know the full implications of GST after a few months. Druk Ferro Alloys Limited’s Accounts Officer Giri Dhari Saha said they have not exported any consignments. “We are waiting to see how GST would impact the prices of our imports and exports.”

Similarly, Bhutan Silicon Metals Private Limited has kept their consignments pending post July. “We might take some time to export after everything is settled,” Marketing Manager Samdup Dorji said.

Krishna Ghalley from Phuentsholing