The Government as done the classification of “hand-made” matches which was being taxed @5% and other matches made either by partially mechanised or fully mechanised units were levied a tax @18%.
All India Chamber of Matches has been trying to convey the fact to Union Government that hand-made match industry did not exist any more and it was either semi-mechanised or fully mechanised. People were making matches using machinery but were claiming to be making hand-made matches only to get the tax benefit. This was leading to lot of tax evasion.
Now, every manufacturer will be treated on par as tax-paying manufacturer will gain with the input credit of 7.5%, the actual tax paid by the manufacturer will be around 4.5%.