Thursday, September 28, 2017

Implementation of the Goods and Services Tax (GST) has hit production of coconut-activated carbon, used for purification of water, edible oil and gas and in sectors such as healthcare and cosmetics, The Hindu reported. While whole coconuts, coconut kernel and husk do not attract GST, a 5% duty is levied on coconut shells which are sold by farmers and vendors in the unorganised sector to charcoal producers. Charcoal, the raw material for activated carbon, is not covered under GST though activated carbon attracts 18% GST, said P. Pradeepkumar, managing partner, Activcarb. There are about 15 units in South India making activated carbon from coconut shells.

According to data available with the Coconut Development Board, the country exports activated carbon mainly to the US, the UK and South Korea. Mr. Pradeepkumar said about three tons of charcoal are needed to manufacture one ton of activated carbon. Availability of coconut shells has come down and charcoal prices are up almost three times since June this year. This is because charcoal producers cannot take input credit of the duty paid on coconut shells. In the case of supply of activated carbon to the domestic market, the buyers are able to take input credit of the GST paid. But, costs have gone up for exporters. The activated carbon industry is growing at 5% annually and exports at 10% to 15%. 

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