Implementation of Goods and Services Tax (GST) is unlikely to have any significant impact on the price of paints for end-consumers.
In fact, a short term disruption in supplies can be expected for a one to two month period, according to the Indian Paint Association.
According to Abhijit Roy, MD and CEO, Berger Paints and the President of the Indian Paint Association, paints are being taxed under the 28 per cent slab in case of GST; which is closer to the effective rate of tax that the industry is paying at present.
With VAT, excise and VAT on excise all put together, the effective rate previously was around 29 per cent.
“As such there will be no impact on prices for end-consumers. The tax slabs are the same,” he told reporters post the 54th annual general meeting of the association.
On the supply side disruption, Roy pointed out that this was a temporary phenomenon. Demand, in fact, will remain unchanged. “May be there may be a one to two month disruption. But it will not affect demand in the segment,” he added.
The paint industry expects a volume growth of around 10 per cent in FY18; while value growth for the fiscal is expected to be a little over 10 per cent, aided primarily by recent price hikes.