Paper industry says all ready for new tax regime, but final test will be today

Businesses are finally facing the inevitable with the shift to the GST regime over the weekend.

Check with representatives of any business segment, they will say the systems and processes are in place. But only on Saturday, when the systems swing into action, will we know how things go. Traders are glad the transition is happening over a weekend as this gives them time to ease into the new system, they say.

Harsh Pati Singhania, Director, JK Organisation, and Vice-Chairman and Managing Director, JK Paper, said the industry is broadly well prepared, particularly the larger organisations. Some smaller players may face challenges, and there are concerns regarding trade. But the test will be on July 1 “when the buttons are actually pushed.” But the overall impact of the big bang reform, the largest after liberalisation, is bound to be positive, he said.

The paper industry has come to grips with the concept of the new tax system, but the final test will be on , the first day of GST roll-out, said a senior executive in a paper-manufacturing company.

Suppliers have to familiarise themselves with a new routine; customers want direct sales rather than have stocks routed through depots — the prevailing practice which makes paper costlier, he said.

Over the last few days, paper movement has stopped from the factories as customers do not want despatches during the transition period. It is clear paper prices will come down by about ₹1,000-1,500 a tonne ex-mill prices, though the exact change will depend on the mills. The drop is primarily due to Excise Duty being done away under GST.

Traders have started submitting their GST registrations to paper mills after the GST Portal opened on June 25. But downstream customers are yet to submit the registration numbers to the dealers.

A leading dealer said paper trade will be on hold over the weekend as businesses familiarise themselves with the new system. There are still some doubts that will only be cleared once the actual process starts, the dealer said.

Large companies have put their ERP on hold and plan to start despatches from Monday, he said. Even retail business is down, he added.

In the cement sector, a senior executive said the basic preparations are in place and they expect a smooth transition. While the Centre has notified the CGST (Central Goods and Service Tax) and IGST (Integrated Goods and Service Tax), some of the State governments are expected to soon notify the SGST (State Goods and Service Tax).