Goods and Service Tax for Indian FMCG Sector: Challenges and Prospects

Goods and service tax is one of the most significant tax restructuring done by the union government considering one India and one Goods and service tax system. GST mechanism is nothing new but the improvement of the existing VAT system.

Wholesale and retail sector of FMCG market will be prominently affected by GST. Therefore survey of 80 wholesaler/retailers of pharma and grocery sectors having turnover above Rs 50 lakh is done in the city of Lucknow to explore that GST enactment good for long term sustainability of economy. Data is analyzed through SPSS using ANOVA and distributive statistics.

The most significant challenges that immerged are-efficient complaint resolution system for GST, followed by high cost of IT based record keeping by retailers and restructuring of existing supply chain which should be ready to book input tax credit for every transaction. 69% of wholesalers/retailers were optimistic for more economic growth after GST. There was no significant difference found between the perception of growth between pharma and grocery FMCG sector. Overall GST will positively affect all the wholesalers and retailers particularly in Grocery and Pharma, FMCG sector.