At first glance, the fact that there is no tax on goods and services has been imposed on books – there was no previous special – which should have been good news for publishers and readers.
The new tax system, which replaces the previous and multilayered version, does not provide GST in books of all kinds. However, there is a catch. Although books do not attract GST, many components of a book do.
Throughout the value chain, the role of copyright royalties printing, GST payments began on July 1, which means the cost of creating a book now higher.
Ananth Padmanabhan, CEO of HarperCollins India, said Scroll.in “GST has an impact on input costs.” And to keep the margins – which have already been under pressure – perhaps publishers have no choice but to raise prices.
With most of the individual titles – banning textbooks and mass-selling mass markets – already with sales down, higher prices are not welcome now.
What happens in a book? Intellectual property comes from the writer, like the manuscript. The physical components include paper, ink, glue, etc., necessary for the printing and binding of a book.
And the services are in the form of printing and delivery to the publisher’s store. Now with GST slapped each of these components, paper and consumables of the printer, for example, add this tax at your cost.
In other words, it will be the publisher who buys the products or services, who will pay for this additional expense.
The publishing industry uses the services of independent experts in many aspects of editing and production – text editing, proofreading, type designing, cover design, illustrations, etc. – each will have to pay 18% GST instead of 15% service fee.
As you pass that cost to the publisher, the expense will increase. Explanation Manas Saikia, co-founder, Talking Tiger Books, “There is a GST 18% in all service providers. If you are registered under the GST, you will be charged your bills.
If they are not registered, there will be a reverse tax expense for the paid publisher. The exact cost increase will vary and I would say that production, pre-press and royalty costs increase by 5% to 6% overall. ”
But why do publishers not receive the same benefit as other industries? As the oldest tax value added, GST also includes the notion of tax entry credits (CCI).
In other words, this means that the seller of the final product has to pay VAT at the current rate, but can claim credits in all GST already paid by its suppliers.
In this scenario, the publisher might have claimed the ITC in the GST paid to suppliers – if there had been a GST in the books that it sells. However, since there is no GST in the books, the question that such credits does not arise.
Thus, the publisher found their costs increase due to the GST paid by their suppliers, accounting for 12% of paper and printing. Says Thomas Abraham, CEO, Hachette India: “Printers have told us there was a 5% increase in the cost of materials due to the GST.”