Impact of GST on FMCG

The Goods and Services Tax (GST) implementation in India is one of the most significant reforms made by the government in terms of indirect taxation in order to develop a single comprehensive and transparent tax regime. This paper explores the effect of the GST legislation on the FMCG segment in India since this market represents one of the main economic drivers of the country owing to the huge volume and number of goods with low profit margins distributed throughout the country. The introduction of the tax has resulted in the cancellation of numerous other taxes such as excise duty, VAT and service tax, making the tax burden lighter in many categories of goods.
In turn, the implementation of the GST in the country has affected positively the supply chain in terms of eliminating inter-state barriers and optimizing warehouse management, thus, resulting in better profitability of the organized FMCG players. Nevertheless, at the beginning of the implementation process, some complications appeared related to compliance issues and the adaptation period.

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