Tarpaulin: Shed over the head, burden on the pocket

[Pradeep Jain]

India is moving quickly towards the biggest tax reform Goods and Services Tax (GST). The GST Council fixed tax rates on of 1211 items, most of which will likely become cheaper as the new rates will be lower than the current effective levies. Though the reaction from the public at large is quite satisfactory however there have been few places where there might be hardships due to the rates so decided.

One such good is tarpaulin. Tarpaulin falls under the Chapter head 3926. The said good was leviable to Excise duty at the rate 12.5% and VAT at the rate of 5% summing to a total of 17.5%. However under the GST law this good has been brought under the slab of 28% which is drastically more than the earlier tax rates. 

Let’s put some light on what tarpaulin is and where is it basically used.

A tarpaulin, or tarp, is a large sheet of strong, flexible, water-resistant or waterproof material, often cloth such as canvas or polyester coated with urethane, or made of plastics such as polyethylene. Tarpaulins are used by truck drivers to shelter, goods when in transport from direct sunshine and rainfall. It is used in by poor sections of society to prevent the roofs of their kuchha houses from any water leakages and other similar damages. Primitive tarpaulin structures are constructed for temporary shelter of livestock during the hotter or colder months. They are a staple around the farm and house particularly if one lives in an area prone to rain, or extreme weather.

The GST Rate Schedule for Goods released recently as per the discussions on rates for various commodities in the GST Council Meeting held on 18th May, 2017 prescribes the GST rate of 28% for ‘other articles of plastics and articles of other materials of headings 3901 to 3914’ thereby indicating that the residuary entry pertaining to tarpaulin sheets will also be classifiable under highest slab rate of GST. The tarpaulin users will face immense hardship if their product is liable for 28% GST because the product is not a luxury item and rather the product is meant for lower income groups and is essentially used in transportation service which is necessary amenities availed by all business.

Hence increasing rate of tax on it by straight to 28% which is 60% higher than the existing rate is a great plight for such people as this will create higher burden on their pockets.

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Discussions to this article

[Keshav Singh]

Thankfully, the GST council has reduced the rate to 18% in its decision taken on 11 th June 2017.

S. No. Chapter / Heading / Subheading / Tariff item - 23

Description of goods 3926 9099 Plastic Tarpaulin

Earlier GST rate approved by the GST Council - 28%

Revised GST Rate approved by the GST Council - 18%