• Fri. Sep 22nd, 2023


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    Building a house will be expensive: 18 percent GST will be imposed on bricks, mortar, sand and ballast.


    Sep 9, 2023

    Symbolic picture.
    – Photo: Amar Ujala

    In Uttar Pradesh, 18 percent GST will be collected on all types of mining including sand, mortar, soil and mountain. This rate has been fixed keeping mining in the category of service tax. There are already royalties on mining. Now, with the imposition of 18 percent GST, the rates of bricks, mortar, ballast, marble etc. will increase. This will have a direct impact on infrastructure related schemes. State Tax Commissioner Minister S has given instructions to strictly follow this instruction.

    There has been a long-standing dispute between businessmen and the department regarding service tax on mining. Before the implementation of GST, there was a provision of five percent service tax in addition to royalty on mining. Mining businessmen say that royalty is also a type of tax, hence two taxes (royalty and GST) cannot be levied on the same product. As the controversy escalated, the matter went to the Supreme Court, where the matter is under consideration. Businessmen argue that the matter is in the Supreme Court, hence GST should not be taken till the decision is taken. At the same time, the State Tax Department has implemented the order of 18 percent GST on mining with immediate effect, saying that neither the Supreme Court’s decision has come regarding this nor there is any kind of ban on GST and recovery, hence we will levy service tax.

    When the businessmen went to the Advance Ruling Authority to protest against this, even the members of the authority were not of the same opinion on this issue. Some members said that 5 percent should be charged while some said that 18 percent should be charged. On this, the UP GST Commissioner fixed the GST rate at 18 percent. Some businessmen recently went to the High Court against the order, but since the matter was pending in the Supreme Court, the High Court refused to interfere. When the businessmen went to the Supreme Court again on this matter, all the applications related to it were being tagged in the pending case only. That means, only when the old case is heard, these will also be heard. Due to the decision, mining businessmen are facing capital crisis. Because no refund will be given on this.

    Building roads and bridges will be expensive.

    The foundation of the entire infrastructure sector depends on mining. The dispute is only on 5 percent service tax. Now by increasing it to 18 percent and ordering recovery, the rates of soil, sand, mortar, crusher etc. will increase. Due to increase in their prices, the cost of every construction including houses, bridges, roads will increase by 7 percent. This means that the house which was built for Rs 30 lakh will now be ready for more than Rs 32 lakh.


    Strict investigation to stop tax evasion.


    – Mobile teams will check the vehicles related to mining and verify the bills.


    – Estimate of estimated royalty on minerals loaded on the vehicle, then estimate of GST.


    To check undervaluation, the department will collect the price list from the executing agency.


    – Rental of mining machinery and genset will also be verified.


    – Registration of every businessman related to mining is mandatory.

    Senior GST advisor Dharmendra Srivastava (CA) said that clarity should be brought in the law. People associated with mining should be given the benefit of input tax credit. If refund is received, then capital inflow will continue. Otherwise, inflation will increase in the construction sector.

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