In the wake of the cement demand being hit by the sluggish real estate sector, mini cement plants owners in Gujarat have demanded relief in Value Added Tax (VAT). Higher VAT on cement is taking a toll on these manufacturers.
Cement, produced by both big and small plants, currently attracts 12.5 per cent VAT along with 2.5 per cent of additional taxes.
“Considering the present scenario, the Gujarat government should reduce VAT on cement to 4 per cent from the current level”, demanded KV Vyas, secretary of Gujarat Mini Cement Manufacturers Association (GMCMA).
At present, Gujarat has 110 mini cement plants with a cumulative production of 5,000 tonnes a day. Over 10,000 people are employed directly and indirectly from these mini cement plants.
“We are passing through a sluggish period. Cement industry is totally dependant on the real estate sector, which is in bad shape due to economic turmoil. Subsequently, the demand of cement has dipped by 35 per cent this year. At this juncture, high VAT rates have added to the woes of the mini cement plant owners”, said Vyas.
The trade body had proposed reduction in VAT before the state budget. “We have been pitching for lower VAT on cement for the past three years but the issue is still pending with the government,” he added.
“The cement industry is labour intensive and state government should take steps to save it. Most of the mini cement plants are located in rural and semi urban areas such as Porbandar, Morbi, Una, Dahod, Panchmahal, Shapar-Veraval. The reduction of VAT will be beneficial for the common people as most of them use the local brands of cement for the construction purpose”, said a mini cement plant owner.