GST responsible for closing down auto parts manufacturing units in Punjab

Around 3000 auto part manufacturer unit in Ludhiana suffering due to GST system

GST responsible for closing down auto parts manufacturing units in Punjab
Badish Jindal.

by Badish Jindal

The GST is responsible for closing down Auto Parts Manufacturing units in Punjab. Delay in payments making units Bankrupt and department issuing notices and sealing premises of units for recovery.  

The recycling billing by auto part traders also responsible for bad days of auto part manufacturers. 

In the year 2019 the auto part industry turned to a sick investment with around 19% slowdown. Due to which thousands of units closed down in India and more than 5 Lakh people lost their jobs.

The auto part units are becoming financially sick due to the GST system. The GST on auto parts is 28%. The auto part units are getting their payments from auto manufacturing companies in 3 to 4 months thus beside the payment of material the GST amount is becoming a big debit. 

The auto parts manufacturers are getting their raw material @ 18% and have to deposit the GST @ 28% on auto parts every month. 

In recent months most of the auto part units failed to deposit their GST and the department issued show cause notices to them. Beside show cause notices as per information the department also tried to seize the premises of many units manufacturing auto parts. 

On an average the auto part units have to deposit 112% of their monthly product value if the payments comes in average of 4 months. 

On the contrary the Banks are reducing the credit to Industry due to decrease of collateral value and decrease in turnovers of the auto part units. 

Around 3000 auto part manufacturer unit in Ludhiana are also suffering due to this GST system.

The other major problem is the recycling of GST Bills by the traders of Auto parts. These units are selling their 28% GST invoices of Auto parts by merely charging 10% to 12% from buyers of such invoices. Many fraudulent manufacturers are buying such invoices in 10% to 12% and claiming 28% input tax on such invoices. So the companies doing clean business are unable to do the competition with such units. 

*The AITF has requested the ministry that in Budget the provision should be brought to collect the tax from auto part manufacturing coming in 28% on quarterly basis.  
*The Banks should be instructed to issue additional finance for GST requirements of Auto part units. 
* The trading of auto part invoices should be strictly checked with their HSN codes.

(Badish Jindal is National President of All Industries & Trade Forum)