Sole Proprietorship Company Registration Bangalore | Kanakkupillai

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FMCG companies seek tax relief -to lift sales 
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• www.kanakkupillai.com

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FMCG - Industry

• The fast-moving consumer goods (FMCG) industry
  has petitioned the government to remove goods and
  services tax on the amount received by dealers
  and retailers as reimbursement against discounts
  and for promotional programmes to boost sales. 

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Central Board of Indirect Taxes and Customs.

• A circular issued by the government in end-June
  had said the amount received by a dealer from a
  supplier to sell a product at a special reduced
  price would be liable to GST, adding to the
  industry's woes. 

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GST Impact

• Dealers have to bear GST on the price inclusive
  of the discount, as per the current provisions.
  Moreover, they do not receive credit against tax
  paid on the discount portion.
• Unless the earlier stocks get depleted, the
  distributor wont buy fresh stock. So additional
  discounts are being given by companies to the
  distributor to do away with existing inventory.

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GST treatment. Excluding certain discounts 

• Discounts are given at various stages and
  situations in the FMCG value chain and it is
  necessary to consider these in the GST treatment.
  
• Excluding certain discounts that are necessary
  for business purposes may put many businesses at
  a disadvantage, said MS Mani, a partner at
  Deloitte India.
• The government has come out with two circulars on
  the issue, but the issues of the levy of GST on
  reimbursement on the subsidy offered to dealers
  and on promotion by dealers have not been
  addressed. 

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Conclusion

• If needed, necessary changes in law should be
  considered to keep it outside the purview of GST.
  Given the wider ramifications, the government may
  want to engage with industry and come up with
  revised and more detailed clarification on all
  these aspects, said Pratik Jain, the national
  leader for indirect taxes at PwC 

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