India: Maharashtra Government imposes 5% Entry Tax on Finished Steel

With the beginning of FY16, Maharashtra government has passed a bill and levied a 5% entry tax on Finished steel w.e.f 1 Apr, 2015.

Maharashtra government on 31 Mar’15 made an amendment to the Maharashtra Value Added Tax Act, 2002 and imposed an entry tax of 5% on the goods covered in clauses (iv) and (v).

The goods include:

1. Steel Bars (rounds, rods, square flats, octagons and hexagons, plain and ribbed or twisted in coil form as well as straight lengths)

2. Steel Structurals (angles, joints, channels, tees, sheet piling sections, Z sections or any other rolled sections)

A trader based in Jalna while talking to SteelMint quoted, “As of now, we are purchasing the material from Chhattisgarh with 2% CST and the imposition of 5% entry tax will increase our costing by 7%. Thus, it will become costlier by 1,500-2,000/MT for the local buyers to purchase the material from neighboring states. It will be beneficial for the buyers to purchase from the state only.”

The state government has taken this initiative to ensure legitimate tax realization on consumption of Finished steel. While, the government will provide set-off as per the provision to avoid double taxation.

It is a positive measure taken by the state government to encourage sales of Long products from the state based Steel units. On the flip side, business of other neighboring states, basically Chhattisgarh and Gujarat, is likely to get affected as these are the major suppliers of Finished long to Maharashtra.

For copy of the bill, click the links

Link 1: For tax amendment
Link 2: For Schedule C

Current Semi Finish & Finished Steel Prices

Prices in INR/MT
Source: SteelMint Research