Railway suppliers seek review of hike in GST rate

The Railway Suppliers Association has asked the Union government to review the GST rate on all railway products. In an order dated September 30, 2021, the Ministry of Finance had increased the rate to 18 % from 12 %.

S. Surulivel, president of the Association, said in a press release that the hike was at the “most inopportune time, in respect of small industry suppliers.”

The railway manufacturing organisations release purchase orders nine to 12 months in advance. Thus, orders for next year were issued last month.

Cost of raw materials have increased 25 % to 40 % in the recent months and price variation clause is applicable only for basic raw materials. It does not apply for finished goods. The railway suppliers who took orders before September 2021 at the prices that prevailed then are incurring loss now. With hike in transport costs and the impact of the lockdown, the component supplying units are hit hard. These units are seeking cancellation of orders and review of prices without penalty.

In such a situation, the government has increased the GST. The increased GST amount will not be reimbursed by Railways if the supplies are effected beyond the scheduled delivery date. Hence, the government should defer the increase to 18 % to next April and enable the units to complete the existing orders without incurring loss, he said.