A staggering hike in the Goods and Service Tax on bricks has agitated brick kiln owners across the country. The GST on brick-field work or manufacturing bricks went up from five percent to 12 percent on April 1, 2022, for those who don’t avail of input tax credit benefits. Manufacturers argue that these rates are unsustainable, they would have to pay a GST of Rs 840 for selling 1,000 bricks for Rs 7,000.
The reduction in brick production will hurt the construction sector. There are more than 19 thousand brick kilns in UP and about 4.5 mn laborers work in them. The brick production sector is rapidly moving towards a major crisis. Despite repeated appeals to the government, the government is not providing relief.
Several different types of bricks are produced in India for use in construction work. Around 80 percent of all bricks are made from clay and only 20 percent from fly ash. The unorganised sector producing bricks from mud employs a large number of laborers, who will be in huge turmoil due to the strike.
Manufacturers have also demanded a reduction in the coal prices by the UP government, which have been hiked by 200 to 300 percent. In 2020-2021, coal was priced at Rs 8,000-9,000 per tonne, which has gone up to Rs 18,000-27,000 per tonne.
The state was supposed to get 12 lakh tonnes of coal but got only 76,000 tonnes in the last four years. The price of imported coal has also gone up. There is also a partial ban on the use of red clay bricks in the construction of government buildings, which also has manufacturers fuming. Coal is provided to thermal power plants at base prices, according to brick producers, who have demanded the same rate. Until now, the GST charged was also just one percent on the sale of bricks.
The increase in coal prices is also a major source of worry for them as around 15 tonnes of coal is needed to make one lakh bricks. Coughing up Rs 16,000-17,000 per tonne of coal is next to impossible.
