Cement industry wants reduction in VAT

Raising concerns over discrimination in tax on cement compared to other building materials, the industry calls for a reduction in VAT in the upcoming Budget.

The cement industry on Tuesday said that the government should bring the value-added tax (VAT) on cement at par with other building materials like steel in the Budget and scrap import duty on coal, gypsum and other fuels, reports PTI.

“There are some lingering discriminations in respect of cement compared to other building materials. This includes equalising the rate of VAT on cement to that on steel and other building materials," ACC Ltd managing director Sumit Banerjee told PTI.

While steel attracts 4% VAT, VAT on cement it is as high as 12.5%. Industry players argue that since both the materials are used for construction, cement should be given a level-playing field to that of steel.

"Though cement is the most essential infrastructure input, the tax on cement is the highest among the items required for building infrastructure. The total government levies and taxes on cement constitute 60% or more of the ex-factory price," industry body FICCI said in a pre-Budget memorandum to finance minister Pranab Mukherjee.

Levies and taxes on cement in India are far higher than in most of the other countries in the Asia-Pacific Region, where the average tax is just 11.4%, with the highest levy of 20% being in Sri Lanka.

Mr Banerjee added that the import duty on coal, gypsum and other fuels should be removed, and customs duty should be levied on cement imports into India.

Echoing Mr Banerjee's views, Dalmia Cement (Bharat) managing director Puneet Dalmia said that the industry expects to be granted "declared goods" status like steel, which would enable the sector to reduce expenditure on taxes.

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