Cement makers seek 20-25% tax cut

The Cement Manufacturers Association has urged the Union Government to bring down the overall tax on cement by 20-25 per cent.

In a pre-Budget representation, the industry body said despite being a core industry, overall taxes hover around 60 per cent, comparable with luxury goods.

Other core industry products such as coal and steel have far lower tax rates.

Excise duty is levied at 12 per cent apart from an additional ₹120 per tonne, while duty on other core items is around 5 per cent.

The rate on cement may be brought down by 6-8 per cent without specific duty. Tax structure has to be simplified to either specific rate per tonne or ad valorem without relating to retail price, the body said.

Abatement may be hiked to 55 per cent from the present 30 per cent.

Customs duty should be levied on cement as duty-free imports handicap the domestic industry.

Or raw materials such as limestone, gypsum, pet coke and packaging allowed in without import duty, the association said.

It has also asked the Government to remove tyre chips used as fuel from the negative list of imports as it can be a cost-effective alternative to fossil fuel.

N Srinivasan, Vice-Chairman, India Cements, told reporters that at the current tax levels, cement price should be over ₹430 a bag instead of about ₹370 as is the case now.

It is unfair that the builders’ lobby keeps accusing cement makers of hiking prices.

At just half a bag – about 25 kg of cement – used per square foot of built-up space, cement cost in construction is small considering builders price houses anywhere between ₹5,000 and ₹15,000 a sq ft, he said.

Cement mills are now working at about 55 per cent capacity utilisation. Slow economic condition is to blame for low demand.

“What is not sold cannot be produced,” Srinivasan said.

Large infrastructure projects have to be expedited for demand to pick up, he said.

COMMENT NOW