publishing trends

There’s no GST on books. And yet books will become more expensive

Suppliers will have to pay GST, and that will raise the cost of producing books.

On the face of it, the fact that no Goods and Services Tax has been imposed on books – there was no excise either earlier – should have been good news for publishers and readers alike. The new tax system, which replaces the older, multi-layered version, envisages zero GST on books of all kinds. However, there’s a catch.

While books attract no GST, many of the components of a book do. All along the value chain, from paper to printing to author royalties, GST payments have kicked in from July 1 onwards, which means that the cost of putting together a book will now be higher. Ananth Padmanabhan, CEO, HarperCollins India, told Scroll.in, “GST does have an impact on input costs.”

And, to maintain their margins – which have already been under pressure – publishers may have no choice but to increase prices. With most individual titles – barring textbooks and mass market bestsellers – already seeing dwindling sales, higher prices are not welcome right now.

Why prices will rise

What goes into a book? The intellectual property comes from the writer, in the form of the manuscript. The physical components include paper, ink, glue, etc., required for printing and binding a book. And the services are in the form of printing and delivery to the publisher’s warehouse. Now, with GST slapped on each of these components, the paper-supplies and the printer, for instance, will add this tax to their cost. In other words, it will be the publisher, who buys the products or the service from them, who will have to foot this additional expense.

The publishing industry uses the services of freelance experts for many aspects of editing and production – copy-editing, proofreading, type-setting, cover design, illustrations, and so on – all of whom will now have to pay 18% GST instead of 15% service tax. Since they will pass this cost on to the publisher, the expenses will rise further.

Explained Manas Saikia, co-founder, Speaking Tiger Books, “There is an 18% GST on all service providers. If they are registered under GST then they will charge it with their bills. If they are not registered, then there will be a reverse tax charge so the publisher will pay. The exact cost increase will vary and I would say production, pre-press, and royalty costs will go up by 5% to 6% in total.”

But why will publishers not get the same benefit that other industries will get? As with the older Value Added Tax, the GST also includes the concept of Input Tax Credits (ITC). Put simply, this means that the seller of the final product has to pay GST at the prevailing rate, but can claim credits on all the GST already paid by his suppliers. In this scenario, the publisher would have been able to claim ITC on the GST paid its suppliers – had there been a GST on the books it’s selling.

However, since there is no GST on books, the question of claiming such credits does not arise. So, the publisher will find their costs increasing because of the GST paid by its suppliers, which amounts to 12% on both paper and printing. Said Thomas Abraham, CEO, Hachette India: “Printers have told us that there is a 5% plus increase in material cost due to GST.”

The impact on royalties

Royalties are the payment that a publisher makes to the writer of a book. It is usually calculated as a percentage of the cover price of the book – usually between 7.5% and 15%, depending on the stature of the writer, the format of the book, and the number of copies sold. This form of payment means that the author’s earnings are proportionate to the number of copies sold. However, some royalties are usually paid as an advance, to be adjusted against actual earnings later. But since publishers do no ask writers to return their advance even if they have not sold enough copies to justify that advance in the first place, this first tranche is thus a sunken cost.

Now, for the first, royalties have come under the indirect tax ambit, attracting a GST of 12%, versus zero earlier. So, an advance royalty to an author of, say, Rs 1 lakh, will now mean a tax payment of Rs 12,000. Who will pay this? As things stand, publishers are preparing to foot this cost as well, using a mechanism called reverse tax, paying the tax on the writer’s behalf as the writer may not have registered for GST.

Another option for publishers as they struggle to contain costs might be to reduce royalty payments to offset the 12% additional tax. That would be bad news for writers – but it may not be a strategy that any publisher will adopt willingly.

Summed up Abraham, “As it appears now, books are poised to become more expensive. Ironic for a category that has been kept ‘GST exempt’, but all the raw materials that make up books have gone up. So publishers may be left with no choice, but to pass on the inflationary increase from GST. Something the government may need to look into, if it kept books exempted so that prices could be held.” Added Neeraj Jain, Managing Director, Scholastic India, echoing a more optimistic view, “It’s difficult to measure the impact of GST on the publishing industry immediately. It is best to wait and watch.”

[Correction and clarification: An earlier version of this article had stated that the GST on author royalties and on printing is 18%. It has been clarified that the rate for both is now 12%. The information has been amended accordingly.]

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Removing the layers of complexity that weigh down mental health in rural India

Patients in rural areas of the country face several obstacles to get to treatment.

Two individuals, with sombre faces, are immersed in conversation in a sunlit classroom. This image is the theme across WHO’s 2017 campaign ‘Depression: let’s talk’ that aims to encourage people suffering from depression or anxiety to seek help and get assistance. The fact that depression is the theme of World Health Day 2017 indicates the growing global awareness of mental health. This intensification of the discourse on mental health unfortunately coincides with the global rise in mental illness. According to the latest estimates from WHO, more than 300 million people across the globe are suffering from depression, an increase of 18% between 2005 and 2015.

In India, the National Mental Health Survey of India, 2015-16, conducted by the National Institute of Mental Health and Neurosciences (NIMHANS) revealed the prevalence of mental disorders in 13.7% of the surveyed population. The survey also highlighted that common mental disorders including depression, anxiety disorders and substance use disorders affect nearly 10% of the population, with 1 in 20 people in India suffering from depression. Perhaps the most crucial finding from this survey is the disclosure of a huge treatment gap that remains very high in our country and even worse in rural areas.

According to the National Mental Health Programme, basic psychiatric care is mandated to be provided in every primary health centre – the state run rural healthcare clinics that are the most basic units of India’s public health system. The government provides basic training for all primary health centre doctors, and pays for psychiatric medication to be stocked and available to patients. Despite this mandate, the implementation of mental health services in rural parts of the country continues to be riddled with difficulties:

Attitudinal barriers

In some rural parts of the country, a heavy social stigma exists against mental illness – this has been documented in many studies including the NIMHANS study mentioned earlier. Mental illness is considered to be the “possession of an evil spirit in an individual”. To rid the individual of this evil spirit, patients or family members rely on traditional healers or religious practitioners. Lack of awareness on mental disorders has led to further strengthening of this stigma. Most families refuse to acknowledge the presence of a mental disorder to save themselves from the discrimination in the community.

Lack of healthcare services

The average national deficit of trained psychiatrists in India is estimated to be 77% (0.2 psychiatrists per 1,00,000 population) – this shows the scale of the problem across rural and urban India. The absence of mental healthcare infrastructure compounds the public health problem as many individuals living with mental disorders remain untreated.

Economic burden

The scarcity of healthcare services also means that poor families have to travel great distances to get good mental healthcare. They are often unable to afford the cost of transportation to medical centres that provide treatment.

After focussed efforts towards awareness building on mental health in India, The Live Love Laugh Foundation (TLLLF), founded by Deepika Padukone, is steering its cause towards understanding mental health of rural India. TLLLF has joined forces with The Association of People with Disability (APD), a non-governmental organisation working in the field of disability for the last 57 years to work towards ensuring quality treatment for the rural population living with mental disorders.

APD’s intervention strategy starts with surveys to identify individuals suffering from mental illnesses. The identified individuals and families are then directed to the local Primary Healthcare Centres. In the background, APD capacity building programs work simultaneously to create awareness about mental illnesses amongst community workers (ASHA workers, Village Rehabilitation Workers and General Physicians) in the area. The whole complex process involves creating the social acceptance of mental health conditions and motivating them to approach healthcare specialists.

Participants of the program.
Participants of the program.

When mental health patients are finally free of social barriers and seeking help, APD also mobilises its network to make treatments accessible and affordable. The organisation coordinates psychiatrists’ visits to camps and local healthcare centres and ensures that the necessary medicines are well stocked and free medicines are available to the patients.

We spent a lot of money for treatment and travel. We visited Shivamogha Manasa and Dharwad Hospital for getting treatment. We were not able to continue the treatment for long as we are poor. We suffered economic burden because of the long- distance travel required for the treatment. Now we are getting quality psychiatric service near our village. We are getting free medication in taluk and Primary Healthcare Centres resulting in less economic stress.

— A parent's experience at an APD treatment camp.

In the two years TLLLF has partnered with APD, 892 and individuals with mental health concerns have been treated in the districts of Kolar, Davangere, Chikkaballapur and Bijapur in Karnataka. Over 4620 students participated in awareness building sessions. TLLLF and APD have also secured the participation of 810 community health workers including ASHA workers in the mental health awareness projects - a crucial victory as these workers play an important role in spreading awareness about health. Post treatment, 155 patients have resumed their previous occupations.

To mark World Mental Health Day, 2017, a team from TLLLF lead by Deepika Padukone visited program participants in the Davengere district.

Sessions on World Mental Health Day, 2017.
Sessions on World Mental Health Day, 2017.

In the face of a mental health crisis, it is essential to overcome the treatment gap present across the country, rural and urban. While awareness campaigns attempt to destigmatise mental disorders, policymakers need to make treatment accessible and cost effective. Until then, organisations like TLLLF and APD are doing what they can to create an environment that acknowledges and supports people who live with mental disorders. To know more, see here.

This article was produced by the Scroll marketing team on behalf of The Live Love Laugh Foundation and not by the Scroll editorial team.