GST cheer for rail equipment makers

Our Bureau New Delhi | Updated on September 26, 2019 Published on September 21, 2019


Manufacturers of rail equipment, including wagons, coaches and rolling stock, will be able to get more input tax credit (ITC) with the GST Council approving their proposal to increase GST to 12 per cent from 5 per cent. The move will increase the competitiveness of the products made in the country.

This has been a long pending demand of railway wagon, coach and engine manufacturers, and had been raised by the Confederation of Indian Industry (CII) and supported by the Railway Ministry.

Recently, Wabtec, the company that acquired GE Tranportation, had explained that input components that go into locomotives, attract a tax of 12-18-28 per cent. This created a situation where the tax on inputs was more than that on ouput products. This led to an increase in cost, which was borne by the manufacturers to the extent of the gap between the taxes.

"The announcement of increase in GST rate from 5 to 12 per cent on rail goods, reinstates the Government’s intention to bring the (Indian rail) industry back on track, " said Anand Chidambaram, Chairman, rail transportation and equipment division, Confederation of Indian Industry.

Finance Minister Nirmala Sitharaman also announced a cut in GST on marine fuel from 18 per cent to five per cent. She said 0.5 per cent FO had been added, a move which seemed to indicate low sulphur fuel oil would also be charged at five per cent GST.

Published on September 21, 2019
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