FMCG distributors are urging the Finance Minister to provide clear guidelines for the upcoming GST slab changes to prevent supply chain disruptions. This follows the Prime Minister’s announcement of GST reforms to reduce the tax burden on consumers.
Here are the key points from their letter:
- Supply Chain Concerns: The All India Consumer Products Distributors Federation (AICPDF) has highlighted that with large volumes of goods already in the pipeline and at retail counters, sudden rate changes without clear instructions could impact margins, cause disputes, and confuse consumers.
- Need for Clear Directives: The association is calling for clear guidelines for manufacturers on pricing and stock adjustments to ensure a smooth transition and that the benefits of the rate cut are passed on to consumers uniformly.
- Input Tax Credit (ITC) Issues: The AICPDF is also concerned about the transition of ITC on existing stock, which could cause financial strain for distributors and retailers. They have requested a framework to ensure trade partners are not unfairly burdened.
- “Sin Goods” Classification: The letter specifically addresses the high GST on aerated beverages, arguing that these should not be treated as “sin goods.” The association points out that these products are consumed by lower-income groups at affordable price points (₹10 and ₹20), and a high tax could negatively affect demand.