GST Blues: Book trouble due to slump in production - The Noel D'Cunha Sunday Column

Two top book print firms in West and South India say we will bill at zero per cent GST. 

A big player in North is charging nine per cent which is net of taxes.

 Vasant Goel, Gopsons

Vasant Goel of Gopsons is categorical that it is 18 per cent. His explanation is that the GST matter can be solved by law. The current classification clearly defines printing as manufacturing service. The job work is defined at 5% GST, otherwise, it is 18%.

Like Vasant Goel, Rajnish Shirsat, co-founder, and CEO, R&S Enterprises, says, “Book printers have been hit. If a printer is producing job work then it's 5%. If a book printer is in manufacturing then it's 18%. So, it's a wait-and-watch game as one is expecting a revision or else it's going to affect printers.”

The point is, as in all cases book printers remain divided.

At the moment, the only work that's happening in the book print segment is the government textbook printing – and that too the tail-end of the orders. This is because most schools have opened.

The private educational publishers had completed the season before GST – so they will have the time to plan ahead for their next season by which time GST impact would become clear.

Trade book printing is in shambles. A commercial printer who specialises in book work has clocked not more than three-lakh rupees of business in the 20 days of July. A book expert who spoke to PrintWeek India, says, "I don’t know if book releases are getting delayed. It will be worth checking with some of the publishers."

A huge difference of opinion

Thomas Abraham, Hachette India

At the moment, book printers are claiming either 5% or 18% for this; and the industry is split in its opinion.There is a difference of opinion between book printers and publishers. The publishers like Thomas Abraham, the CEO, Hachette India state that their book print partners have stated there is “a 5% plus increase in material cost due to GST.” Many publishers are of the view that the impact of cost increase should be absorbed by printers wherever they have unit price contracts.

Rajnish Shirsat says, “Recovery within 90 days will be tough which will result in printers not getting input credit, paying by themselves and any delay will attract 15% penalty. The situation is grim,” he concludes.Most of the leading book printers have either not printed in July or not billed; either way indicating a massive slowdown.

Rajnish Shirsat, R&S Enterprise

Two contrary views

One view is that the books should have been taxed so that the whole value chain would have benefitted and there would have been no confusions. It could have brought in margins which were not available in the past.

But then the central government would not get "the mileage of doing a noble job on GST."

The contrarian view is that if they were taxed the benefits would have never come to the reader. In the current situation, as every link is getting squeezed for margins, there would be more efficiency and the consumer will benefit from this.

Publishers are meeting government officials and seeking a revision of the rule. They hope to get "some clarity in the month of August."

Jaya Bhattacharji Rose, says in her article on Scroll.in, “But why should publishers not get the same benefit that other industries will get? As with the older Value Added Tax, the GST also includes the concept of Input Tax Credits (ITC). Put simply, this means that the seller of the final product has to pay GST at the prevailing rate, but can claim credits on all the GST already paid by his suppliers. In this scenario, the publisher would have been able to claim ITC on the GST paid to its suppliers – had there been a GST on the books it’s selling.”

Will the book twain meet?

Aditya Bhat of Lustra Print who attended an informal meet between publishers and book printers in Delhi says, “No ITC will be available for books as they are nil under GST. However, books for export will have "zero-rated" GST and the supplier can claim all taxes on inputs.”

Aditya Bhat, Lustra Print

Bhat adds “As in the earlier regime printers producing books with their own paper and other inputs are eligible under Chapter 49 of the GST while those procuring from publishers will be coming under job-work printing services outlined in Chapter 99 and pay relevant taxes.”Bhat states, “Books with an accompanying CD will have no taxes if the book is the primary product. If not the higher percentage of tax will be applicable on the entire product.” For example, a music CD with a booklet. 

Bhat states, “Books with an accompanying CD will have no taxes if the book is the primary product. If not the higher percentage of tax will be applicable on the entire product.” For example, a music CD with a booklet. 

Ignorance prevails

PrintWeek India has received many eMails from printers and publishers; and authors who claim royalty.

One angry eMail said: No one knows what the exact percentage of GST to be charged is and are afraid to make commitments, fearing they may have to fork out the difference (if any) from their pockets.”

Another eMail received by PrintWeek India highlights the apathy of the government officials.

The eMail says, there were questions raised in front of the GST panel. These included: if the book publishing industry has no GST to collect (on sales), then why should out-sourced printers, laminators, binders, etc have to charge them GST.  If they have to, can the book publisher claim a refund?  If yes, how much?

The GST panel could not answer these basic questions. 

The AIFMP and other publishing trade bodies have written to the “government authorities” and are hopeful of a proper answer. 

As a publisher said to PrintWeek India, “It is fine to say below Rs 20-lakh will not have to file nor take GSTN, what about them, do they surrender their VAT number and then what? You mean the sales tax inspector will not come knocking on their doors?  But then, even the sales tax inspectors are not too sure. They are saying please get the GSTN now, later when things get clearer, surrender it.  Not too sure.  Coming from an officer of the sales tax department this is scary.”

July is a washout for print and the mood is dampened with a 40% dip in the printing of books. So enjoy the rains, is all we can say at this time.

What they think?

An AIFMP delegation comprising of Uday Dhote, Vinod Kumar Jain, Rajesh Sardana, Bhuvnesh Seth and Kailash Babu met concerned officials in Ministry of Finance in New Delhi on 21 July 2017 in order to gain clarity on the rates of GST applicable to various printed products.

Summarising the discussion, Dhote says, "When the printing units are using contents given by the customer, according to the department, they are prima facie engaged in producing customised printed materials and would be treated as 'supply of printing services' and be subjected to GST rates as per Serial No 26 and 27 of Notification 11 – Central Tax (Rates) dated 28 June 2017."

Notification 11 – Central Tax (Rates) dated 28 June 2017: GST rates as per Serial No 26 and 27

1. In case where content and paper or paperboard is supplied by customer (SAC 9988)
a. The GST rate is 5% when job work is in relation to printing of newspapers, books, journals or periodicals
b. The GST rate is 18% when job work is in relation to printing of products other than (a) above


2. In case where only content is supplied by customer (SAC 9989), the GST rate is 18%

Dhote adds, "It is only when the content and printing are both belonging to the printer, it will be ‘supply of goods’ subjected to GST as per HSN Codes and rates given in Notification 1 – Central Tax (Rates) dated 28 June 2017."

(With inputs from the PrintWeek India team)

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