'Apply compound tax on top of GST for brick industry'

Madurai: With the central government is keen on implementing Goods & Service Tax across the country, brick manufacturers in the state have appealed it to consider the compounding taxation for their industry. They have met the minister of state for finance Jeyant Sinha in this regard recently.
According to manufacturers, unit-wise or brick-wise taxation is complicated since the unit damage is very high in the kilns in every stages of production.
Explaining the difficulties in taxing per unit, vice-president of the Tamil Nadu Chamber of Brick Manufacturers Association S P Jeyaraj said raw brick get damaged if the mix of clay and water differs even slightly.
The bricks get damages if the sunlight is intense during drying. If it rains, the raw bricks will be washed away and if the heat is excess or insufficient in kilns, bricks will be damaged. The manufacturers can't asses the exact damage or stock as well as production, he said.
Another challenge is brick manufacturers directly sell the bricks to end users. This results in tax revenue loss for the government from second sales. Furthermore, bricks produced in a district are mostly consumed within the respective districts to avoid transportation cost.
"Considering all the difficulties in production, stocking and sales, the associations for long pressed the state government to implement compounding method of taxation on brick kilns. In compounding method, taxation is done on number of kilns in a manufacturing unit. After Tamil Nadu implemented such taxation, many more states followed helping the industry," Jeyaraj said.
Hence, the associations have demanded the central government also to follow compounding method of taxation in upcoming Goods & Services Tax. Similarly, the brick manufacturers also asked for the exemption of taxing clay - the raw material - to manufacture bricks in GST like it is exempted in Tamil Nadu.
Brick kilns employ unskilled labourers from rural areas when there are no agricultural activities. There are around 2,000 brick chamber kilns in the state. Most of them are situated around Chennai and Coimbatore, according to the Tamil Nadu Chamber of Brick Manufacturers Association.
There are also numerous brick makers doing business in small-level.
In states like Tamil Nadu, Uttar Pradesh, Haryana, Bihar and Punjab, the clay brick industry is doing well because the state governments have supported the industry with compounding method of taxation.
An overview of chamber brick making in Tamil Nadu
- There are more than 2000 chamber brick kilns spread across the state with most of them situated around Chennai and Coimbatore cities
- There are 75 chamber kilns in Madurai, Sivaganga and Ramanathapuram districts
- In addition to these chamber kilns, there are hundreds of country brick makers across the state
- The annual production in chamber brick making is around 25 to 30 lakhs of bricks
- Every chamber brick kiln employs nearly 100 unskilled labourers and another 200 to 300 are employed per kiln in transportation works
- Brick manufacturing happens around 7 months in the state except monsoon months