GST on Bagasse-Based Particle Board (Plain or Laminated)

GST Rate on Bagasse-Based Particle Board (Plain or Laminated)

Indian Government, in the Goods and Services Tax (GST) package, has simplified taxation on all goods and services in the nation, which clearly enables the manufacturer and a consumer to understand this tax system. Among such products, the "Bagasse-based Particle Board" is one product under question between manufacturers as well as consumers for this alternative-wood-based board to save ecology. We will analyze the GST on bagasse-based particle board in India, along with its classification, applicable GST rates, and also the important consideration for business entities which are involved with its production and supply.

What is Bagasse-Based Particle Board?

A bagasse-based particle board (plain or laminated) is an engineered wood board used for manufacturing structural flooring, doors, and other building components, largely constructed from the residue after squeezing juice out from sugarcane popularly known as "bagasse". The material is environmentally friendly because it contributes to recycling the by-products of the sugar industry. Therefore, the product can be used for furniture and building industries in a sustainable manner. Bagasse, being compressed and bonded with resins, has the flexibility to be used for furniture, floors, and even in wall construction and partitions.

Challenges in the GST Structure

Though the environmentally friendly and economical benefits of these particle boards are going to be presented, challenges in the context of tax compliance and probable ambiguity related to tax rates have been there. Some manufacturers will not find classification under HSN to be effective or cannot easily keep up with the changing tides of taxes due to new notifications and circulars from the GST Council.

Classification of Bagasse-Based Particle Board Under GST

In the Indian GST regime, products are classified under specific HSN (Harmonized System of Nomenclature) codes to determine the tax rate that is applicable. Generally, the bagasse particle boards fall under the HSN Code 4410, which deals with "particle boards of wood or other ligneous materials."

This again depends on whether this board falls under the definition of a wood-based particle board or if it falls under any other category for GST. Since bagasse is a non-wood lignocellulosic material, the GST treatment may vary based on the nature and the application of the product.

As per notification no 01/2017 (Central Rate), dated 28.06.2017

Schedule II,

Tax (Rate 6% CGST)

Entry Serial No. 92,

Chapter Heading "44 or any Chapter,

Clause (f), Description of Goods: "Bagasse Board"

In this regard, GST deparment is also issued a circular F. No.354/432/2018-TRU for Clarification regarding GST rates & classification, where Para No. 9 as under

......9. Applicability of GST on supply of Bagasse based laminated particle board:

9.1 Representation has been received seeking clarification on applicability of GST rate on Bagasse based laminated particle board. In this context, it is sated that the Bagasse Board has specific entry at S. No. 92 in Schedule II to the Notification 1/2017-Central Tax (Rate). Accordingly, the said entry covers Bagasse boards falling under 44 or any other chapter and 12% GST. Further, it is also stated the description “Bagasse board” in the said entry also covers Bagasse board [ whether plain or laminated].

9.2 Thus, it is clarified Bagasse board [whether plain or laminated] falling under chapter 44 will attract concessional GST rate of 12%.

Futher,

In case of Prayagraj Dyeing & Printing Mills Pvt. Ltd. (GST AAR Gujarat), GST of Bagasse based Particle Board manufactured with a composition of 75% of bagasse, 25% of wood particles and 5 kgs. of resins. Held that— Bagasse based Particle Board, which is a composition of 75% of bagasse, 25% of wood particles and 5 kgs of resins, will fall under entry at Sr. No. 137A in Schedule III to the Notification No. 01/2017- Central Tax (Rate), dated 28.06.2017.

GST Rate on Bagasse-Based Particle Board

The standard GST rate for Bagasse-based particle boards will be approximately 18% since it is a category of product, just like wood-based particle boards and all other products in the same category. But it may slightly differ based on:

1. Use of the product: If particle board is used in the manufacture of furniture, that is exempted under specific purposes, for instance in the government project or under specific ecological related usage, it will benefit from a lower GST rate or exemption.

2. Product features: As the board has a different HSN code or has some unique characteristics, it will attract different tax rates.

Conclusion

As per above discussion about to "GST on Bagasse-Based Particle Board (Plain or Laminated)" we can say that GST on Particle board is based to how to manufacturing Particle board (plain or laminated)

If only bagasse is used, the GST rate is 6% + 6%. However, if wood or any material not derived from agricultural produce is used, the GST rate is 9% + 9%