Notebook Suppliers not Providing Goods at Zero-GST Rate: Manufacturers flag Cost Escalation & Import Surge

Notebook manufacturers across India have expressed concerns over growing production costs following the recent changes effectuated to the Goods and Services Tax (GST) rates changes that placed notebooks and exercise books under the zero-tax category.

Reports state that the All India Notebook Manufacturers Association (AINMA) has written to Finance Minister Nirmala Sitharaman, expressing woes that suppliers are refusing to sell paper and cover materials at the notified zero-GST rate, citing their inability to avail Input Tax Credit (ITC) on inputs and machinery.

In a representation dated October 14, AINMA stated that the anomaly in the current GST structure has created a paradox where a zero-tax rate is leading to higher production costs on industry players, rather than providing the intended relief. Suppliers of paper, unable to offset taxes paid on inputs due to the exemption, are reportedly charging an additional ₹8,000 to ₹8,500 per metric tonne, which is about 12–14% higher than pre-revision rates in order to recover their loss of ITC claimable.

Manufacturers explained that this issue extends beyond mere cost escalation. They pointed out that paperboard used for notebook covers continues to face classification dilemma, preventing several mills from billing at the revised rate. This has resulted in a shortage of key raw materials and increased reliance on intermediaries, adding to the existing financial burden on suppliers.

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Domestic Industry facing Loss

The association further cautioned that the domestic industry faces a growing threat from imports routed through countries within the Association of Southeast Asian Nations (ASEAN), where notebooks attract no customs duty or Integrated GST (IGST) under current trade arrangements.

With Indian manufacturers unable to offset input taxes while importers enjoy a complete duty-free structure, AINMA warned that the imbalance may lead to a rapid influx of cheaper foreign notebooks, heavily affecting local production and employment.

While the government’s intention behind exempting notebooks from GST was to make educational supplies more affordable for buyers, industry members contend that the measure has instead disrupted the credit and supply chain. The looming feat now exists whether manufacturers will be forced to pass on the cost burden to the consumer, ultimately raising notebook prices for students and institutions - in effect nullifying the tax rate revisions.

AINMA has urged the GST Council to reconsider the zero-rate classification and place notebooks and related paper materials under a 5 per cent GST slab, which would restore ITC availability and stabilize costs across the supply chain. The association emphasised that such corrective steps are vital to safeguard domestic production and ensure that the objective of affordable education materials is not compromised by structural tax distortions.

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