In today’s GST update, there is both good news and bad news for the consumers.
While Govt. has decided to reduce GST tax slabs for 66 items, which means now more products would be cheaper; fear about the shortage of heavily used FMCG products like the biscuit, jam, pasta, toothpaste, and cornflakes etc is dominating the market.
This fear has stemmed from the recent case of shortage of medicines, which has been attributed mainly to the GST regime.
GST Tax Slabs for 66 Items Reduced
After GST Council’s 16th meeting, Finance Minister Arun Jaitley announced that GST tax slabs for 66 items have been reduced from their existing slabs.
This will make the price of some essential items cheap: insulin, agarbattis, school bags have now been reduced to 5% slab from 28%; pickles, mustard sauce and murabba will now attract GST slab of 12%, as compared to 18% earlier; cashew nuts have been reduced to 5% from 12% earlier.
IT industry will rejoice as GST on printers have been reduced to 18% from 28%, while children’s books will be placed under 0% from 12% earlier.
Movie lovers will also be happy because GS slab on movie tickets priced at Rs 100 has been placed at 18%, while more than Rs 200 movie tickets would be now placed at 28%.
You can get the whole list of 66 items, whose GST slabs have been reduced, here.
GST Concerns: SMEs Unprepared; FMCG Shortage?
As the July 1st rollout of GST is coming closer, concerns about GST implementation is also increasing at the same rate.
There are mainly two major concerns as of now: SMEs are still unprepared; and fears about FMCG shortage, once GST is implemented.
Bharat Goenka, who is the MD of Tally Solutions, one of the most popular accounting software said, “Nearly 50 percent of Indian businesses are not aware of the changes that GST will usher in,”
In fact, not only businesses but banks are also not prepared.
The Indian Banks Association, which represents 200+ banks, have said their members are still not prepared for the massive tax regime change.
K Raghu, former president, Institute of Chartered Accountants of India, said, “The entire ecosystem needs to be changed to accept GST. An ideal date for implementation would be 1 September.”
Besides, shortage of FMCG products post GST rollout is making retailers sweat, and fear the future.
In order to clear inventory, all major online retailers are offering massive discounts. As per reports, close to Rs 20,000 cr worth of inventory would be sold out before July 1st.
And that includes FMCG retailers as well. In order to clear confusion, and to avoid extra taxes under GST, they are selling off their current inventory.
But, if all the inventory are sold before July 1st, then what will happen after that.
Vipul Parekh, co-founder of BigBasket, said, “The concern for us is there may be a shortfall in inventory just after the GST rollout. We have asked FMCG companies to ensure that stocks are not impacted in the three months just after the GST implementation.”
While packaged and frozen foods have been placed under lower tax slabs, popular FMCG products such as biscuit, jam, pasta, toothpaste, and cornflakes would be placed under 28%, thereby attracting higher tax slabs compared to now.
FMCG are worried over the availability of these products post-GST.
Will Govt. extend the deadline for GST? We will keep you updated.
