Impact of GST bill on TMT steel bars

Abstract

On 1st July 2017, Goods and Services Tax has been rolled out in India, by the Prime Minister, Narendra Modi. The GST council chaired by the Finance Minister of India, Arun Jaitley, is the body that governs GST. It was replacing a multiplicity of taxes with a single tax regime. The tax was levied in slabs of 0%, 5%, 12%, 18% and 28% for all the applicable goods and services. The model implemented in India is a dual model, consisting of Central GST and State GST. Under these, various taxes are subsumed and some others are continued in the GST regime. By unifying a set of indirect taxes into one, it was targeted at reshaping the economy of India. The benefits of GST at a high level are derived from those at the transactional stage. The impact of GST on the transactions at every stage of the supply chain is the key to understanding the advantages of implementing GST in India. From manufacturing to sale, the costs involved, transfer of title and taxes paid should be observed during pre-GST state and GST regime. The comparative analysis of these two observations can help understand the impact of GST on the good. In order to understand the impact, a certain good should be selected through which, we can mark the differences between the two regimes. Steel industry in India is one of the highly growing sectors, with its demand outpacing the supply every year, though the supply keeps increasing. India is currently the third largest steel producer and is also expected to be the second largest by 2018. Steel consumption is increasing in India in various forms. One of the major forms it is being used, is in the construction industry for reinforcing the concrete structures. Every type of infrastructure construction need the steel bars to reinforce its concrete structure. The steel bars that are used for construction are the Thermo-Mechanical Treatment (TMT) bars. TMT bars is one of the materials that is highly used in volumes and is fast moving in the construction industry, thereby contributing a major part of the growth of steel industry. For this project, the cost structure, including taxes, of TMT bars is analysed in detail to achieve the objectives i.e. to understand the impact of GST at transactional level throughout the supply chain.