The Indian government has hiked the Goods and Service Tax (GST) on ore and concentrates of metals like iron ore, copper, aluminum and zinc to 18 percent from five percent, a government official said on Tuesday, September 21.
The official said that the higher GST rate was decided by the GST Council, the apex body of representatives of the central and state governments that govern the tax regime.
According to officials at steel mills, the increase in the GST on input will not impact the cost of production of steel but will have some impact on cash flows, particularly when stocks are moving slowly and sales are sluggish.
The officials said that the producers will be able to claim credit for the higher GST after concluding sales. However, at times when sales are slow and stocks are rising, steel mills will still have to procure iron ore paying the higher GST at 18 percent and credits may be claimed only after sales invoices are raised and, in the case of slower sales, the 18 percent GST payout and delayed claims of credits will entail cash flows slowing down.