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    Project Work: Impact On GST Fast Moving Consumer Goods Sector in India

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    Madhuri kethineni
    Fast moving consumer goods (FMCG) is the fourth largest sector in the Indian economy. There are three main segments - food and beverages, healthcare, and household and personal care which account for almost half the sector. The document discusses the impact of GST on the FMCG sector in India. It provides an overview of GST rates and structure in India. Several studies have found that GST implementation will benefit producers and consumers by simplifying taxation, though effective implementation requires effort from central and state governments.

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    Project Work: Impact On GST Fast Moving Consumer Goods Sector in India

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    Madhuri kethineni
    981 views9 pages
    Fast moving consumer goods (FMCG) is the fourth largest sector in the Indian economy. There are three main segments - food and beverages, healthcare, and household and personal care which account for almost half the sector. The document discusses the impact of GST on the FMCG sector in India. It provides an overview of GST rates and structure in India. Several studies have found that GST implementation will benefit producers and consumers by simplifying taxation, though effective implementation requires effort from central and state governments.

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    Fast moving consumer goods (FMCG) is the fourth largest sector in the Indian economy. There are three main segments - food and beverages, healthcare, and household and personal care which account for almost half the sector. The document discusses the impact of GST on the FMCG sector in India. It provides an overview of GST rates and structure in India. Several studies have found that GST implementation will benefit producers and consumers by simplifying taxation, though effective implementation requires effort from central and state governments.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    981 views9 pages

    Project Work: Impact On GST Fast Moving Consumer Goods Sector in India

    Uploaded by

    Madhuri kethineni
    Fast moving consumer goods (FMCG) is the fourth largest sector in the Indian economy. There are three main segments - food and beverages, healthcare, and household and personal care which account for almost half the sector. The document discusses the impact of GST on the FMCG sector in India. It provides an overview of GST rates and structure in India. Several studies have found that GST implementation will benefit producers and consumers by simplifying taxation, though effective implementation requires effort from central and state governments.

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    © All Rights Reserved
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    of 9

    PROJECT WORK

    Chapter 1

    Impact on GST fast moving consumer goods sector in India


    INTRODUCTION
    Fast moving consumer goods (FMCG) is the 4th largest sector in
    the Indian economy. There are three main segments in the sector
    –food and beverages, healthcare and household and personal
    care which accounts for almost half of the sector.
    FMCG companies are looking to invest in energy efficient
    plants to benefit the society and lower costs in the long term.
    Growing awareness, easier access, and changing lifestyles are
    the key growth drivers for the consumer market. The focus on
    agriculture,MSMEs, education, healthcare, infrastructure and
    employment policies by the government also have an impact on
    the growth of this sector.
    Since different products are taxed at different rates under
    GST,on a macro level, the average tax and the final prices that
    the end customer ends up paying have averaged out post
    implementation of GST,with some products becoming more
    expensive (aerated beverages, shampoos etc.) and others
    becoming cheaper (toothpaste, soaps etc.)
    As the retail sector witnesses unprecedented growth, India has
    emerged among the most desirable retail destination in the
    world. Even through modern trade is growing at 15 to 20% per
    annum, it has low organized retail penetration of just 8%
    Further, various infrastructural challenges remain.
    India’s economic growth and its demographic profile make the
    country a compelling business case for global retailers planning
    an international foray. The strong economic growth is attributed
    to high disposable incomes, growing middle-class influence,
    increasing individual wealth and the country’s large young
    population. The untapped rural sector and the lesser developed
    Tier II Tier III cities provide ample opportunities for growth.
    The liberalization of FDI in single-brand retail and the expected
    opening up of FDI in multi-brand retail have generated
    significant interest among multinational retailers
    FAST MOVING CONSUMER GOODS (FMCG) are good that
    sell quickly and for a low price. Consumer packaged goods is
    another for these goods. This is one of the industries that makes
    a significant contribution to our economy. India is one of the
    largest producers of FMCG products. The FMCG industry is
    divided into three categories.
    In India, there are three main segments in the FMCG sector.
    • Household and personal care –50%
    • Healthcare –31%
    • Food and Beverages(F&B)-19%
    Scope of the study
    India has implemented GST on 1.7.2017.GST is a real game
    changer and it will lead to a complete over haul of current
    indirect tax system.GST,being new in India, includes
    tremendous changes in the various sectors of the economy.it will
    affect all the industries irrespective of a single sector.FMCG
    segment is the fourth largest in the Indian economy. For most
    segments within the FMCG spare,GST brings tidings on the
    back of lower tax incidence when compared to the total tax paid
    pre-GST.

    Prospects in the FMCG sector in India-


    FMCG sector in the Indian rural market is one of the most
    booming sectors in Indian economy. The villages of Indian
    account for 12.2% of the world's population. The farm sectors
    which boosted the rural economy resulting in the higher
    consumption of FMCG products.

    The consumers in both rural and urban sectors can afford high-
    priced branded products nowadays with the high disposable
    income.
    The FMCG sector in India has grown significantly in the year
    2007 and this gave rise to huge prospects in the sector. The rural
    and urban sectors fared equally well in the processed food items
    in the year 2007.The rural market separately performed well in
    the personal care, fabric care. And hot beverages while the urban
    market did well in the home care, personal care,bakery,dairy products,
    and the like.
    Objectives of study
    Following are the objectives of the study
    1. To understand the concept of GST.
    2. To obtain a comprehensive overview of consumer’s and
    3. retailer’s awareness and perceptions of GST.
    4. To find out the impact of GST on sales of retailers.
    5. To analyze the impact of changes in the tax rates of fast-
    moving consumer goods on consumers.
    6. To study the framework of GST.
    7. To study the impact of GST on FMCG sector.

    Chapter 2
    Review of literature about articles
    GST is known as the goods and Services Tax.it is an indirect
    tax which has replaced many indirect taxes in India such as the
    excise duty, VAT, services tax,etc.The goods and Service Tax
    Act was passed in the parliament on 29th march 2017 and came
    into effect on 1st July 2017.
    In other words, Goods and Services Tax is levied on the supply
    of goods and services. Goods and Service Tax Law in India is a
    comprehensive,multi-stage, destination-based tax that is levied
    on every value addition.GST is a single domestic indirect tax
    law for the entire country
    There are three takes applicable under this
    system:CGST,SGST,IGST.
    • CGST:is the tax collected by the central government on an
    intra-state sale (e.g., a transaction happening within
    Maharashtra)
    • SGST:is the tax collected by the state Government on an
    intra-state sale (e.g., a transaction happening within
    Maharasthra)
    • IGST:it is a tax collected by the central Government Foran
    inter-state sale (e.g., Maharashtra to Tamil Nadu)
    The fast-moving consumer goods (FMCG) industry or consumer
    packaged goods (CPG) industry is mainly responsible for
    producing, distributing and marketing fast moving consumer
    goods.
    The Indian FMCG sector is the fourth largest sector in the
    economy with a total market size in excess of US$13.1 billion.
    Fast moving consumer Goods (FMCG) goods are popularly
    named as consumer-packaged-goods. Items in this category
    include all consumable (other than groceries and pulses) people
    by at regular intervals. Fast Moving consumer goods is also one
    of the fastest growing sectors among all the sectors in the Indian
    economy.
    GST IN INDIA
    In India GST rate for various goods and services is divided into
    four slabs: they are 5% GST,12%, GST,18% GST.These rates
    are decided by the GST council. This council revises the rate
    slab of goods and services periodically. The GST rates are
    usually high for luxury supplies and low for essential needs.
    FMCG sector would also benefit from goods and services Tax
    in the form of saving a considerable amount of expenses on
    logisticks.Distribution cost of the FMCG sector currently
    accounts to 2-7% of total cost which is expected to drop to 1.5%
    after implementation of Goods and services Tax.
    Basic product such as milk,rice,wheat and fresh vegetables have
    been kept under the NIL bracket which is in line with
    expectation from the FMCG experts. Paneer branded and sold
    like mother dairy paneer or Nestle paneer and Frozen vegetables
    have been kept under the 5% bracket which would be largely
    neutral as the current rates are around 3-4%
    GST is collected at each level of the supply chain, thus
    eliminating the cascading effect of tax.This game –changer tax
    reform has helped businesses in various ways to boost the
    company as a whole.
    PRESENT GST RATE STRUCTURE
    Rate Rationalisation
    The biggest challenge since GST implementation for FMCG
    and Retail sector has been the effective tax. While GST was
    expected to simplify taxation and bring uniformity, the different
    tax rate slabs higher rate for consumer durables led to an
    increase in the cost of some items of mass consumption.
    Given the same, the GST council has been working on
    rationalisation of rates.in a recent GST council meeting rate
    reductions were introduced with a specific focus on products
    such as napkins, domestic electric appliances (food grinders,
    hair dryers, mixers etc.
    Some of the Literature and Reviews presented:
    Jaiprakash (2014) in his research study mentioned that the GST
    at the Central and the state level are expected to give more relief
    to industry,trade,agriculture and consumers through a more
    comprehensive and wider coverage of input tax set-off and
    service tax setoff, subsuming of several taxes in the GST.
    Sherawat & Chandra, (2015) conducted a study focused on
    advantages and challenges of GST faced by Indian in execution.
    they concluded that a simplified and transparent tax system was
    the need of Indian economy. Pointing out the various advantages
    they said that GST will provide India a world class tax structure
    and a seamless tax system, but it will depend upon effectiveness
    of its implementation
    Khurana & Sharma, (2016) conducted a study with a view to
    explore various benefits and opportunities of GST by throwing a
    light on its’ background, objectives of proposed GST plan and
    its impact on Indian tax scenario. they concluded that GST
    implementation will benefit producers and consumers although
    its implementation requires concentrated efforts of all stake
    holders especially central and state government.
    Shaik et al, (2015) studied the concept and impact of GST on
    Indian economy. The study also focused on some aspects of
    GST models. This study also covered the advantages and
    working of GST.The study concluded that GST in Indian frame
    work will lead to commercial benefits which were untouched by
    VAT system and would essentially leads to economic
    developments

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