Tiles may make your home costly

Constructing your dream home may get a tad costlier as the price of vitrified and floor tiles has shot through the roof.

In what appears to be a fallout of the recent raids in Morbi conducted by excise officials, the ceramic manufacturers are now compelled to show the actual MRP (maximum retail price) .

The industry has hiked the MRP by as much as 100 per cent on vitrified tiles to ensure that the tax is paid. The MRP of floor and roof tiles has been raised by 50-75 per cent, said sources in the Directorate General of Central Excise Intelligence (DGCEI).

The MRP on the invoice of major vitrified tiles manufacturers was much lower than the existing price, a DGCEI official claimed.

The Rs 1,500-crore ceramic industry paid a duty of Rs 7 crore in March 2007 and this figure would go up to Rs 20 crore this March. So far, the department had recovered Rs 16 crore and expects the remaining in the next few days.

The ceramic industry gets abatement of 45 per cent, which means that for every Rs 100 they have to pay 4.4 per cent tax on an MRP of Rs 55.

"The industry has been facing a stiff competition from China for the last few years. Customers want tiles at a lower price hence they avoid seeking bill, the brunt of which has to be borne by the industry," said Bhecharbhai Patel, chairman of Morbi Chamber of Commerce.

The government has increased VAT by 2.5 per cent taking it to 15 per cent besides levying 8 per cent excise duty, service tax and education tax. In all, a tax of about 24 per cent is levied.

The MRP on the vitrified tiles box of average quality was Rs 350-400, as against the actual price of Rs 700-800, the DGCEI official said.

"To withstand competition from China it is not feasible to raise the prices. The prices of raw materials have been rising constantly and our production has also been affected in the last two months or so due to the raids. About 20 per cent of the ceramic products available are from China and due to its competitive pricing its share is increasing," said Velji Patel, president of Morbi Tiles Association.

According to the DGCEI, for the last three years since the MRP-based assessment has come into being, the industry has evaded about Rs 200 crore. Of this, about 40 units alone that are into manufacturing vitrified and porcelain tiles have managed to evade Rs 150 crore.

Industry sources said that from next month there could be a further increase of 10 per cent in the cost of tiles.