With the rise of modern-day technology, information data is now accessible at the touch of a button all over the globe. Gone are the times when authors had to bury themselves in copious amounts of paper to stay competitive. Information is now everywhere, accessible to practically anyone with an electronic gadget. However, the current web pattern has had a negative impact on the publication and printing industries.
The popularity of e-books has been increasing, while the publishing business is struggling to stay afloat. From July 1, 2017, the Goods and Services Tax (hereafter referred to as 'GST') went into effect. GST is an inter-stage, a destination-based tax levied on each value-adding stage of the manufacturing process. The GST regime imposes a tax throughout every stage of the sale. The GST has eliminated the formerly relevant spiralling tax effect.
Did you know?
About 160 countries in the world have the GST.
Rates of GST on Books and Newspapers
The GST rate for books and newspapers exists in HSN code chapter 49. In a meeting conducted on May 18, 2017, the GST committee voted on the GST rates for products and services, with GST introduced in India on July 1, 2017. The GST rate for books and newspapers is examined in-depth in this article.
GST is not applicable on:
Printed books, notably braille books and newspapers, as well as publications, calendars, atlases, charts, and globes, are all exempt from GST.
Brochures are subject to the GST rate:
Brochures, booklets, and other print materials are subject to the 5% GST rate, whether on individual pages or not.
The GST rate is 12% for:
Other hard copies, newspapers, photos, and other printing sector products, as well as scripts, typescripts, and plans, are taxed at a rate of 12% GST. Some of the things taxed at 12% GST include:
- Graphic, sketching, or picture books for kids.
- Music, whether printed or in a script, bound or unbound, with or without illustrations.
- Original piece architectural, engineering, manufacturing, economic, geographical, or other sketches; hand-written texts; digital reproductions on photosensitive paper; and duplicate copies of the preceding.
- Stamp imprinted material; currencies; cheques forms; share, stock, or bond papers and equivalent documents of title; unsold postage, income, or similar tokens of existing or future issue in that they have, or will have, an acknowledged face amount
- Cards, published or drawn; hard copy cards, with or without enclosures or embellishments, carrying personalised congratulations, greetings, or notifications, whether or not depicted.
- Calendars, including chronological blocks, of any form, are printed.
The GST, like the previous Value Added Tax, includes the notion of Input Tax Credits (commonly known as 'ITC'). Simply put, this implies that the ultimate product vendor must pay GST at the current rate but can seek credits for all GST paid by his suppliers. If GST was applied on the books, the author would have been entitled to receive ITC on the GST paid to its vendors. However, the issue of obtaining such credits does not emerge because there is no GST on books. As a result of the GST paid by the publisher's suppliers, which is 12% on both paper and printing, the author's expenses would rise.
The following explanation will help you understand the above arrangement:
Let’s say for ₹10,000, a publisher purchases commodities to produce a book. He must pay the relevant GST on the commodities, which is 18%. The cost of purchasing these commodities has now increased to ₹11800. The book will be priced at ₹15000 when sent for sale to vendors, depending on the economic value with all expenditures included. On the other hand, no GST applies to the books. As a result, the author is responsible for the extra amount of ₹1800, which becomes an additional expense. As a result, the proportion of indirect tax payments gets disrupted, and the publisher's burden increases.
As a result, the publisher has little choice but to raise the price of the book in order to recoup the money he has paid.
GST on Newspapers
What is the discounted GST rate on newspapers? Is there a GST on newspaper sales? Is it necessary for me to pay GST on my business Newspaper? There is no requirement to pay GST on newspaper sales. HSN Chapter 4902 imposes a GST on newspapers even though the newspaper is exempt from GST under the GST Law. As a result, there is no GST charged for newspapers.
The GST rates of 0, 5%, 12%, 18%, and 28% on certain items are approved by the GST Council. Widely used products and services account for 5%, regular products and services account for 12%, mostly household and electronic products and services account for 18%, and special category products and services, including premium, account for 28%. Excluded Categories provide zero-rated GST on the most necessary products and services. Premium products and services and certain specific products and services are subject to a surcharge in addition to the GST rate of 28 per cent.
Information concerning the GST rate tariff on newspapers is provided solely for educational purposes. Before engaging in any business dealings, verify the accuracy of the above data and any adjustments to the GST rate published in the newspaper.
What is an Input Tax Credit, and How Does It Work?
One of the primary advantages of GST is the continuous and smooth route of ITC. The ITC is a device that prevents taxes from cascading. In layman's terms, 'tax on tax' describes the sliding of taxes. Compensation for taxes levied by the central government is not accessible as a set-off for taxes imposed by state governments and, conversely, under the current taxation structure. One of the most crucial aspects of the GST system is that it would apply GST throughout the complete supply chain, which both the central and state governments will levy at the same time. Because the tax imposed by the State and Central Governments would have been part of the same tax framework, credit for tax paid at each level would be accessible as a set-off against tax payable later.
The following are the documents used to obtain credit:
- Invoice from a provider of products or services, or both
- Invoice from a provider of products or services, or both
- A debit notice provided by a provider Bill of entry or other customs-related paperwork
- Amended invoice
- Input Service Distributor (ISD) issues this material.
- However, because there is no GST on hard copies, the author cannot produce documentation for recovering credits, such as a slip acknowledging that the receiver of the book has paid the tax.
It's amusing that, even though books are still considered "GST exempt," their costs are rising. If GST is imposed on hard copies, this will not only assist the distributor in recovering costs but will also help lower the price of the book.
- When speaking to the media, Mr Amit Bhargava, the chairman of Taxman, a renowned publishing business, remarked, "Although publications are not taxed under GST, we are penalised because we do not receive the input tax credit. The cost of books is expected to rise by 15% to 20%."
- Mr Subash Goel, Secretary of the Association of Education Publishing in India, also spoke to the media about the GST issue "We think that the MRP of books will increase by 12-15% as a consequence of the greater costs incurred by authors as a result of the GST system. The 12% GST on writer earnings will be levied through inverse charges, which means that distributors will not be able to claim an input tax credit on just this expense."
Effect of GST on Plagiarism
Plagiarism in the publishing business is pervasive across the country, and imposing a GST on printed books is likely to be a protective move to fight piracy. The entire GST system depends on displaying a credit balance. A person seeking GST credits can only do so if the credits he claims cover the amount of GST paid by the receiver.
For example, if a person claims an ₹1,000 ITC, the same sum should have been given equally to all those who purchased the books and paid GST. This is how GST attempts to preserve the equilibrium.
Because GST does not apply to hard copies, the ITC adds an enormous hardship for the distributor, perhaps leading to piracy to cover the costs.
Suppose GST is deemed appropriate for hard copies. In that case, it will address two of the publishing company's most pressing issues: the extra expense of GST incurred by the publishers and the overwhelming incidence of piracy.
Effect of GST Rate on Books and Newspapers. According to the current tax situation, all types of printed books are exempt from GST. While it benefits the reader, it does not relieve publishers and printers from it. Different types of paper, paper pulp, cardboard boxes, adhesives, and other things used to create books are subject to GST. The GST rate in this category varies between 12% and 18%. As a result, the publisher must bear the relevant GST amount, and because printed books are exempt from GST, the author cannot reclaim the GST amount of money paid. The implementation of GST in the Books and Newspaper industry has the potential to reduce counterfeiting.
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