Monday, 6 March 2017

GST - FMCG Items To Become Cheaper In India

Tax experts state that the present practice is of tax on tax that is; VAT is charged on the cost of production. Additionally, VAT is also charged on the excise duty added at the gate of the factory making the cost go up. This tax on tax would get eliminated after the Top GST Consultant In India implementation of the GST. The result of this would be the reduction in the cost of many products. These products range from FMCG to the garments.

As per the tax experts the essential services like the cultural activities, the Ambulance, pilgrimages and the events of the sports  would become expensive as  the present rate is 14.5 percent and this rate would get enhanced to 18-22 per cent.Hence,the cost of traveling, eating out, banking, hiring cabs, watching movies, buying branded jewelery, watching IPL would all rise.

The present taxation system that is based on the production would undergo a change and would become a consumption based system. Since the VAT and the excise duty would reduce from 25-26 percent therefore, the manufactured consumer goods would become cheaper. The cost of the services would increase from the present level of 15 percent.

At present, about 25 to 26 percent of the cost above the cost of the production is being paid by the consumer. This is because of the value added services (VAT) and the excise duty (about 12.5 per cent). Though there is no indication of the changes to be brought because of the GST Accounting Audit Service yet tax experts state that it’ll be somewhere between 18 to 22 percent. This, considering all the possibilities, would bring down the cost of the basic goods. Certain items that are considered to be essential are not taxed today and are expected to remain out of the bracket of the tax even under the GST.

The manufacturing hubs of FMCG products get impacted because of the state/excise schemes. Under GST, there are possibilities of the manufacturing locations to get readjusted because of the commercial perspective and this readjustment might impact the prices of the goods. An excise duty of 12.5 percent and a VAT of 12.5 to 15 percent are attracted by the goods depending on the state. Further, there are varied taxes like the input tax credit retention, CST, entry tax, Octroi, etc. till the product reaches the consumer.

After the implementation of the GST, the overall indirect cost would get reduced extensively and the credit flow Ind AS Implementation In India would increase for the manufacturers. This might reduce the cost of the production and increase the profits of the base line. This would provide room for the reduction of the prices for the end users.

For seeking suggestions on GST & IND AS and Roadmap To GST & IND AS Implementation, contact AKGVG & Associates in New Delhi India

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