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GST comes into effect: Five areas of concern for consumer goods industry

As the Centre flagged off GST on Friday midnight, here are five areas of concern for retailers, traders and manufacturers in the consumer goods industry.

india Updated: Jul 01, 2017 23:14 IST
Soumya Gupta
Labourers sit next to a banner after a protest against the implementation of the goods and services tax (GST) on textiles, in New Delhi.
Labourers sit next to a banner after a protest against the implementation of the goods and services tax (GST) on textiles, in New Delhi.(Reuters Photo)

After the rollout of the goods and services tax (GST) at midnight on Friday, some sore points remained for the consumer goods industry.

Here is a look at five major areas of concern for retailers, traders and manufacturers in the sector:

1) Biscuits

Biscuits of all types will be taxed at 18% under the GST regime. While this would not hurt premium biscuits, the price of the popular glucose variety will rise. Mayank Shah, category head of biscuits and deputy marketing manager at Parle Products (makers of Parle G), said he and other biscuit makers have made representations to the government to reduce this tax rate.

2) Branded packaged commodities

Loose unbranded commodities like dal, rice and other dry staples are exempt from GST. However, branded and packaged versions of these goods will be taxed at 5% under the new regime. The Retailers Association of India (RAI) has made representations to the government seeking exemption for these goods from GST, the association said in a press briefing earlier this month. RAI member Kishore Biyani, who leads the Future Group, had said that packaged commodities are safer and of a better quality than loose commodities and therefore should not be taxed.

Read | GST: A game changer for the Indian Economy

3) Online home delivery

Under the services tax slabs of the GST regime, e-commerce firms that deliver goods for vendors on their website must deduct 1% tax collected at source for the centre and state GST each. This has prompted vendors to pull away from e-commerce portals, including restaurants from foods delivery apps, Mint had reported earlier. These e-commerce portals have sought a revision in tax collected at source since the beginning of this year, said Saurabh Kochhar, co-founder and chief executive of Foodpanda India.

4) Home delivery services

Under the current GST rules, a physical retailer delivering goods will be taxed for the service at the same rate as the highest taxed product in the basket being delivered. RAI chief executive Kumar Rajagopalan said retailers are making representations to the government to revise this rule and replace it with a flat charge for home delivery.

Read | How GST impacts auto, real estate, telecom and retail sectors

5) E-way bills

Major retailers, traders and manufacturers across most industries are worried about the lack of clarity on the rules governing e-way bills. Under the GST regime, all vehicles carrying goods across state lines will be required to carry an e-way bill, which is a detailed invoice of the goods being carried along with their HSN (harmonized system of nomenclature) code and the time they will spend in transit. States have been asked to implement e-way bills at their discretion.

(Published in arrangement with Livemint)