Car dealers, pharma, brick kilns demand relief amid GST reshuffle

The reduction in GST has delighted consumers, boosting their buying power and fueling brisk sales across many sectors. Yet some industries claim they were overlooked as the government unveiled the new rates.

Car dealers, brick kilns, and pharmaceutical firms are now facing losses, contending that the Centre did not protect their interests during the tax restructuring.

On behalf of the pharmaceutical industry, Amit Kapur says the new slab structure produces a serious mismatch: raw materials (chemicals) still attract 18 per cent GST, while finished products are taxed at 5 per cent. Earlier, companies purchased inputs at 18 per cent and sold finished goods at 12 per cent, a differential of 6 per cent. That gap was manageable. But now, the 13 point difference must be recovered through input tax credit (ITC). Given that profit margins in the competitive generic medicines market are already slim, firms must await government ITC disbursals — often delayed by more than two months — just to realize earnings.

Brick kiln operators echo similar frustrations. According to Mukesh Nanda, procurement of coal and other raw materials is now taxed higher, while the sale of bricks faces a lower GST. As a result, kiln operators will increasingly depend on ITC and must contend with heavier paperwork and refund delays.

Car dealers handling vehicles over 1,200 cc are also voicing objections. The government has removed the 17 per cent compensation cess, but many dealers still hold inventory purchased under the old regime. They fear their stock will suffer losses, as the prior cess paid may not be recoverable.

While consumers are enjoying benefits — hotel room tariffs are expected to fall, and railway approved bottled water prices have already been reduced (for example, 1litre Rail Neer from Rs 15 to Rs 14) — these industries argue the transition costs are too heavy.

Officials have stated that industry feedback will be monitored and “pain points” addressed, but for now these sectors are demanding clear transitional rules, faster refunds, and mechanisms to adjust or carry forward legacy tax burdens.