Tax evasion by some hurts copper firms

A SECTION OF recyclers and primary copper producers, contributing around 75% ofthe 1.6 million tonne (MT) domestic production last fiscal, is bearing the brunt of “price distortion” caused by another section.

- SURYA SARATHI RAY

The latter use domestically procured end-of-life scrap without paying taxes and sell the final product ata discount. Primary producers such as Hindalco, Vedanta and Kutch Copper account for around 50% of the domestic supply. Of the remaining, 17% comes from those who use imported scraps and 33% from recyclers who procure domestic scrap to make finished goods.

The core issue for both genuine recyclers and primary producers is the use of fake invoicing and goods and services tax (GST) arbitrage. By purchasing copper scrap through unregulated channels, some operators effectively reduce their average GST burden to less than 18%.