It will take 6 months for GST to settle in, says Tata Chemicals MD Mukundan

There are pluses and minuses from the GST regime for the chemicals and fertilisers industry, says Tata Chemicals Managing Director R Mukundan. Excerpts from an interview:

How has GST impacted Tata Chemicals?

The rollout has been smooth for us. There has been a marginal reduction in output tax rates on soda ash, cement and fertilisers. We have cut prices of soda ash, bicarb and cement from July 1 to pass on the benefit of lower tax. Also, input tax credit was not available in the earlier regime.

However, there will be some adverse impact on working capital for the fertiliser industry due to IGST (Integrated Goods and Service Tax) on stock transfer and IGST of 18 per cent on imported raw materials, which earlier attracted very low CVD (countervailing duty) due to concession notifications.

Are fertiliser dealers in villages finding the transition to GST difficult?

It may be a bit premature to comment on this as the first set of full returns is being filed just now. We understand that most of the dealers avail of the services of accountants to manage their books. Initially, the dealers are likely to consult them for GST-related queries, too, and take their guidance.

Is the clause making buyers responsible for sellers’ GST payment worrisome?

While all our raw material suppliers have GST registration, there are a few minor service providers who don’t. We have set up a mechanism to meet the compliance requirements for these service providers. For our Mithapur-based soda ash operations, we have worked with our suppliers to ensure that all our raw materials, fuel, stores and spares and service purchases are from GST-registered entities.

What are the challenges in the soda ash business?

We do not foresee any major challenges in the adoption of GST in the soda ash business. We have seen significant GST registration in the unorganised sector, which even otherwise makes up only a small segment of the market. Currently, our entire soda ash sales are to GST-registered customers.

How long will it take for the GST regime to settle down?

The rollout has been smooth for us, with GST-compliant customer invoices being generated through ERP systems on July 3. The first test of the GSTN system and the process of filing tax return will be in August-September. Overall, we feel it will take about 5-6 months for the new system to settle down.

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