The steel ministry has expressed concerns that cost of steel manufacturing will increase as electricity, being one of the major inputs, has been kept out of the Goods and Service Tax.
The concerns were expressed at a recent meeting of the ministry with the Prime Minister's Office, a government official said.
“Electricity being a major input for steel industry will increase the cost of manufacturing if it remains out of the GST,” the official said.
The concerns were also expressed by the steel ministry during the meeting that the Clean Energy Cess of Rs 400 per tonne which was being charged pre GST remains effectively non-cenvatable in the new regime.
Natural gas, one of the inputs used in manufacturing sponge iron/Hot Briquetted Iron, an intermediate product used in steel making, has been kept out of GST purview. Under the previous regime, a partial was available, the official said.
“However, in the new regime, the tax paid on the natural gas is a cost and no input tax credit is available on the same,” the official added.
The steel ministry is also of view that royalty is charged on iron ore at 15 per cent of the base price and is yet not cenvatable.
Besides, Forest Development Fee (FDF) and similar charges like contribution in District Mineral Foundation and National Mineral Exploration Trust, which are in the nature of tax, need to be subsumed in GST, the official said.
The steel industry had earlier in the month said that with GST rollout the unorganised players in the sector will have to move to organised form of doing business.
GST – India's biggest tax reform since the Independence – was rolled out this month, unifying more than a dozen central and state levies.