Traders want VAT off handmade paper

Calcutta Paper Trader’s Association has sought exemption of handmade paper from Value Added Tax (VAT).

Speaking at the 90th annual general meeting of the association, in Kolkata on November 22, Arup Kumar Dutta, Calcutta Paper Trader’s Association, pointed out that the clause of imposition of minimum penalty of Rs 2,000 for late submission of return should be reconsidered by the state government.

“Handmade paper is a burning issue in West Bengal. It attracts four per cent VAT here, while in many states it is exempt from VAT,” said Dutta.

The paper traders also indicated possibility of lay-offs in the industry in wake of the economic slowdown in the country.

“The paper industry is not in a bad shape, so in need not worry,” the minister said.

However, Asim Dasgupta, finance minister, West Bengal, said the paper industry was relatively immune to the slowdown, as the rate of literacy was on an increase. Gajanand Agarwal, chairman, East India Paper and Board Mills, said, in view of the recessionary trend, the paper traders should try create more demand, producers and dealers should keep minimum margin and industrialists should use cheaper inputs. Dutta also said, “Frequent changes in VAT return forms create confusion in compliance and puts unnecessary pressure on the dealers. Submission of details of purchase and sales statements, along with quarterly VAT return and audit at the end of the year is a merely duplication of work.”

Also, amidst market volatility in different industries, the paper industry also saw several price hikes, Dutta said. The global production of paper at present is about 380 million tonnes, said Sandip Sen, president, Bengal National Chamber of Commerce and Industry.

India ranks 15th in the global paper production, with an annual yield of 6.5 million tonnes of paper per year, including newsprint.

The country has about 500 paper mills, with an average capacity of 10,000 tonnes per year, as compared to 135,000 tonnes per year globally. The per capita consumption of paper in India is 6-6.5 kg, against 30 kg globally, according to Sen.

The Indian paper market has grown at about 6.5 per cent annually over the last few years, against the global average of 2.5 per cent.