CMA is lamenting that cement has been placed under the highest tax slab under GST; 28% which is a missed opportunity to boost the industry. The industry has been struggling for the last few years due to a very high tax incidence levied on cement. In the Asia Pacific region, an average of 11.4 per cent tax incidence is levied on cement while in India it is the highest; 60 per cent. Even in Sri Lanka which levies the second highest tax incidence on cement in the region, it stands at 20%. This factor has affected the health of the industry since it is only able to utilise 70 per cent of capacity operations due to low demand.
Due to the capital-intensive nature of the industry, margins are low for the manufacturers. CMA argues that a reduced tax rate would have helped lower cement prices thereby, boosting the housing sector – which is the biggest consumer of cement.