Gurvinder SinghLudhiana: Hundreds of corrugated and paperboard box manufacturers in Ludhiana are grappling with a severe working capital crunch as GST refunds remain pending for months, industry representatives have said. Manufacturers claim that funds running into lakhs are locked up due to the inverted duty structure under GST, making it increasingly difficult for units to sustain operations amid rising raw material costs.Under the current tax regime, cartons, boxes and cases attract 5% GST, while key raw materials such as duplex paper, kraft paper and paperboard are taxed at 18%, resulting in an inverted duty structure and accumulation of input tax credit.Deepak Garg, a box manufacturer, said prolonged delays in the refund process were choking businesses. “Our working capital is stuck, making it difficult to run day-to-day operations,” he said.Kartar Singh, another manufacturer, called for an automated refund mechanism, saying businesses should not have to wait months for funds that are rightfully theirs.Kuldeep Makkar, president of the Punjab Corrugated Box Manufacturers Association, said GST refunds had been pending for several manufacturers since Jan and Feb. He said Ludhiana has over 600 corrugated box manufacturing units, many of which are struggling to manage operational expenses due to delayed refunds.Adding to the burden, paper prices have risen nearly 30% over the past year, squeezing margins further. Manufacturers said customers are often unwilling to immediately absorb higher packaging costs.Kamal Chopra, general secretary of the Offset Printers Association, said the inverted duty structure was affecting both corrugated and paperboard box manufacturers. He argued that the current system unnecessarily locks up funds and increases compliance requirements. He urged the govt to adopt a uniform taxation structure across the supply chain to minimise excess input tax credit and reduce dependence on refunds.The impact is also being felt by suppliers. Mandeep Goyal, a supplier of duplex and kraft paper, said several customers facing liquidity issues were placing fewer and smaller orders, affecting business volumes across the packaging sector.Industry representatives have urged the govt to streamline the refund process and scrap the inverted duty structure, arguing that the present arrangement is hurting the entire packaging supply chain.
