Pune: The Indian Construction Equipment Manufacturers’ Association (ICEMA), which has a sizeable membership in Pune, has sent a representation to State Finance Minister Sudhir Mungantiwar seeking a reduction in tax under the newly introduced Goods and Services Tax (GST) regime. The construction manufacturing industry, which paid up to 17 to 18 per cent tax under the excise and sales tax regime, has now been put under the 28 per cent bracket, leading to a substantial slowdown in the sales.
Speaking exclusively to Sakal Times, Managing Director, Schwing Stetter (India) Pvt Ltd and President of the ICEMA, Anand Sundaresan said that the representations are being made to finance ministers of all States, who are also members of the GST Council, to look into the issue of taxation on construction equipment. “The industry has seen an over 10 per cent hike in taxation under GST in most States causing a slowdown in the sales of these equipment. The sale of spare parts, on the other hand, has dropped,” he said.
According to Sundaresan, this particular industry produces products that come under the infrastructure category as a lot of this equipment is used for infrastructure development across the country. “We are seeking infrastructure status and taxation of 12 per cent so that the contractors do not face cash flow crunches and buy machines to complete their projects. The high taxation has affected the cash flow of contractors and also put restrictions in terms of credit limit available from banks. Due to this, the input cost of contractors is increasing which will eventually lead to higher cost for development of infrastructure,” he said.
He said another major concern for them and the contractors is the lack of clarity over the availability of Input Tax Credit (ITC) for these products as the contractors are end users of construction equipment.
“The sales of spare parts have been affected as contractors are in anticipation of a drop in price under the GST regime. They are pushing or delaying the purchase of construction equipment as there is no clarity on handling input and output tax,” Sundaresan said. He said that ICEMA has been sending representations to the govt even before GST was introduced. “We have even written to the Ministry of Heavy Industries. Jointly with the Builders Association of India (BAI), we are making representations to the GST Council as well as the finance ministers of all States to reduce GST on construction equipment,” he said.