Special Insight : India GST changes – impact on paper sector

The GST effect – Kraft and corrugation businesses face higher costs

23 September 2025

In new rates that became effective on 22nd September 2025, the GST Council of India increased the tax rate on paper and paperboard from 12% to 18%, while pulling the tax on corrugated boxes down to 5%, from 12% earlier. The GST hike on upstream while reduction on downstream creates an inverted GST structure that has put converters under pressure due to higher working capital requirements. Paper manufacturers selling on credit will also need to bear higher working capital costs.

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The recent GST rate changes in India, effective 22 September 2025, have created an inverted tax structure in the paper sector, specifically impacting kraft paper mills and corrugators. With GST on paperboard increasing to 18% and decreasing to 5% on corrugated boxes, converters are facing higher working capital requirements and significant pressure on production costs. Our special insight explores the unintended consequences of this policy shift, including the inability of box manufacturers to claim input tax credit on essential services and capital goods. We provide expert commentary from industry leaders like Pradip Agarwal of the Eastern India Corrugated Box Manufacturers' Association on the estimated 7-9% increase in production costs and the challenges of the long refund process. Old Economy tracks these critical regulatory developments to help utilities, manufacturers, and investors understand the shifting economics of the Indian forest products value chain. Our analysis covers impacts on uncoated P&W paper, pulp, waste paper, and tissue stock, providing the market intelligence needed for strategic decision-making in a complex tax environment.
Old Economy is a premier provider of commodity market intelligence, offering specialized data and strategic advisory services for the global nuclear power, paper industry, and packaging sectors. Our mission is to empower global enterprises to navigate specialized commodity corridors with unmatched precision and elite advisory. We track printing and writing paper trends, pulp market dynamics, and recycled paper imports. Our exclusive interviews with industry leaders provide unique insights into the India packaging board market and the challenges of raw material availability. Our methodology combines high-quality data with robust assumptions to provide unparalleled foresight. Whether you are looking for uranium price forecasts, paper market intelligence, or metal and mining advisory, Old Economy delivers the insights needed for capital allocation and commercial success in the old economy sectors that underpin global infrastructure. Our expertise spans across critical industries that form the backbone of the global economy. In the nuclear energy sector, we provide deep-dive analysis into the uranium fuel cycle, reactor technology developments, and the emerging SMR (Small Modular Reactor) market. Our forest products division focuses on the rapidly evolving Indian market, covering everything from newsprint to specialty paper segments. In metals and mining, we offer strategic insights into base metals, critical minerals, and the transition to battery metals for the green energy revolution. We believe that high-quality data, robust methodology, and plausible assumptions are the key to unlocking market opportunities. By bridging the gap between raw data and actionable intelligence, Old Economy serves as a trusted partner for utilities, miners, traders, and financiers worldwide. Our commitment to excellence and analytical rigor ensures that our clients stay ahead of market trends and navigate complex regulatory landscapes with confidence. From Mumbai to Singapore, our international team of analysts and industry veterans brings a wealth of experience to every report and advisory project. We are dedicated to providing the most accurate, timely, and relevant intelligence to help our clients build a sustainable and prosperous future in the old economy sectors.