Outlook English - Print Subscribers Copy Outlook English, 26 February 2018 | Page 52

GST BLUES

Pump Makers Are Gasping

Post-GST business thins to a trickle for small units . Time has again come for Kovai to prove resilience .
by G . C . Shekhar in Coimbatore

THE decrepit tile roof above him symbolises the plight of Prathap Sekar ’ s small machining unit in one pocket of the city . The 34-year-old Coimbatorean is no more sure of a recovery in his business . “ First , the demonetisat ion ( of November 8 , 2016 ) slowed down my machines . Then the GST ( goods and services tax , on July 1 , 2017 ) has shut them down ,” he bemoans .

For the last three months , orders that Sekar used to get from a leading pump manufacturer and good old clients have thinned to a trickle . This January they stopped completely . “ I still have some 200 pieces of motor end covers the pump company had ordered ,” he points out . “ I cannot blame them . For , they are yet to get about Rs 20 lakh as GST refund .”
He has asked his four employees to find jobs elsewhere till the situation improves . Sekar himself is working part-time in another machining unit to make sure that his wife and their school-going daughter do not go hungry . Coimbatore , which is home to hundreds of such tiny industrial units , teems with similar tales of woes in the wake of GST .
Sekar , whose annual turnover is just about Rs 6 lakh , comes in the non-GST bracket of below Rs 20 lakh . Yet his pump manufacturer has asked him to enrol for GST to claim input tax credit from the job-work he gives to Sekar . So instead of paying no GST , Sekar ends up paying 18 per cent GST for the parts he supplies to the pump-maker . Before the GST regime , he , as someone running a micro industry , used to pay just the income tax since he enjoyed zero tax even under VAT ( valueadded tax ). “ Once the micro industries doing such job ord ers for bigger companies enrol for GST , they lose their GST
G . C . SHEKHAR
CHIP IN A homemaker joins to save labour at the family ’ s workshop
exemption even if they fall below the Rs 20-lakh limit ,” points out V . Sundaram , president of the Coimbatore District Small Industries Association ( CODISSIA ). “ It is unfair to charge 18 per cent GST for general engineering job works , when the government has lowered GST for job works in textiles and leather industry . This anomaly warrants correction .”
Unlike Sekar , J . James is an independent manufacturer of pump parts . He buys his own raw material and has invested in computer-aided design and manufacturing machines for making high-end parts for submersible pumps . With an annual turnover of Rs 50 lakh , he used to pay only VAT of 12.5 per cent and 2 per cent excise duty for his parts . Today , he coughs up 18 per cent GST for the same parts . “ Not only has GST pushed up steel cost , I ’ ve to now borrow from moneylenders to pay my GST by the 20th of every month . For , they levy a fine of Rs 50 per day for delayed payments ,” reveals James , who heads the local association of tiny industries . “ Also I have to cough up Rs 2,000 every month to an auditor to file my returns .”
According to a tax inspector , Coimbatore has nearly 10,000 unregistered tiny ind ustrial units supplying parts to manufacturers of textile machinery , pumps and motors , wet grinders and other type
52 OUTLOOK 26 February 2018