Notebook makers raise GST concerns, warn of rising costs and import surge

The All India Notebook Manufacturers Association has urged the government to address GST anomalies that are pushing up raw material costs and could lead to cheaper imports from ASEAN countries

The All India Notebook Manufacturers Association (AINMA) has written to Finance Minister Nirmala Sitharaman, seeking urgent intervention over the new goods and services tax (GST) rate structure, which, it says, is hurting the domestic notebook industry.

 

In a letter written to the minister on October 14, as seen by Business Standard, AINMA said that although paper used for notebooks has been placed under a zero-tax category, suppliers across the country are refusing to sell at that rate. Instead, they are adding extra charges because they cannot claim input tax credit (ITC) when supplying at zero GST. This has made raw material costlier for notebook makers.

 

“Despite the intention to apply a zero per cent GST rate on paper used in notebook manufacturing, no paper mill in India has agreed to supply at that rate. Instead, suppliers are imposing charges of approximately ₹8,000 to ₹8,500 per metric tonne (which is 12 to 14 per cent) as they cannot avail ITC on inputs and plant & machinery in course of exempted sale,” the letter said.

 

The association also pointed to confusion over the classification of paper board used for notebook covers. Manufacturers say the current classification is incorrect, which is stopping many mills from supplying material at the new rate.

 

Another major concern is the competitive disadvantage faced by domestic producers. Under the revised GST structure, notebooks imported from Asean countries would attract no customs duty and no integrated GST (IGST). AINMA said this could lead to cheaper imports and affect local production, while large importers are already preparing to bring in finished notebooks from these markets.

 

The letter further noted that notebook makers will lose ITC on several materials used in production—such as ink, lamination film, adhesive and thread—because the final product is zero-rated. This will push up the overall cost of notebooks, the industry warned.

 

AINMA urged the government to create a corrective mechanism to address these challenges and protect the domestic manufacturing ecosystem. It said such a step would support the broader goal of promoting indigenous products.

 

Abhishek A Rastogi, founder of Rastogi Chambers, said that the move to make paper and notebooks zero-rated without aligning input taxes has resulted in an inverted duty structure, creating practical challenges for the industry.

 

“The government has appropriately taxed notebooks at zero per cent. However, paper has been taxed at either zero per cent or 18 per cent, depending on whether it is used for notebooks or for other manufactured products,” Rastogi explained. 

 

“This classification-based differentiation leads to confusion and operational difficulties, as paper mills may face challenges in determining the end use of their product. In some cases, they might not be able to pass on the full benefit or may remain apprehensive about the usage of the final goods.”

 

He further suggested that a pragmatic and simplified approach would be to tax all kinds of paper uniformly at 5 per cent, thereby eliminating the end-use-based classification and ensuring smoother compliance and better credit flow across the supply chain.