In a big blow to kiln owners and consumers, GST on certain varieties of bricks has been hiked from 5% to 12% from April 1 and norms related with input tax credit (ITC) have also been changed. Brick kiln owners will have to face another setback as the exemption limit for coming under the GST ambit has been halved to yearly turnover of Rs 20 lakh from the previous limit of Rs 40 lakh.
The kiln owners are up in arms against the Centre, saying the changes were made without any intimation, but tax experts say these were decided in the GST council meeting held in September last year.

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From April 1, GST rate on building bricks, earthen or roofing tiles, bricks of fossil meals or similar siliceous earths, fly ash bricks or fly ash aggregate with 90% or more fly ash content and fly ash blocks has been increased from 5% to 12% with ITC on inputs (mainly GST paid on coal), input services (mainly GST paid on freight) and capital goods. The brick manufacturers have been given an option to pay GST at the rate of 6% under special composition scheme, but in that case, they will not be able to avail the ITC. All brick manufacturers with a turnover above Rs 20 lakh are required to be registered and pay GST at above rates. Earlier, the limit was Rs 40 lakh.

These changes were notified after the decision was taken in the 45th GST council meeting held in September last year. These will certainly increase the rates of bricks and hit people planning construction. Overall, the construction industry will have to face increased costs. For construction of residential housing, ITC is not permitted and this increase in prices of bricks will certainly increase rates of housing projects.

Slamming the Centre, Gagandeep Singh, a brick kiln owner and member of Ludhiana Brick Kiln Association, said, “It is shocking news for us. We were never informed about this increase by any government department and we came to know about it on April 1 from our CAs. Entire brick kiln industry is under stress. Earlier when VAT was in place, we used to pay a lumpsum tax and when 5% GST was introduced, instead of putting the load on customers, we took it on ourselves. But now that the GST has been hiked to 12%, it will not be possible for us to bear it and it is impossible to convince the customers to pay more. This hike could not have come at a worse time, as already rates of coal and other raw materials are touching the sky. This GST increase has added insult to our injuries.”


Harjinder Singh, executive member of Ludhiana Brick Kiln Association, said, “From April 1, the GST system for the brick kiln owners and manufacturers has become very complicated. We will have to think twice before doing business. On one side, the GST has been increased by 7% and on the other, the limit of getting covered under GST has been reduced to half. If someone does not want to get into the trouble of paying 12% GST, he has been given the option to pay 6% GST, but he will not be able to claim ITC, which means the entire 6% will be added to his cost. The situation has become so complex for us that as of now we have suspended all new sales and we are still consulting our CAs for options.”

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