The GST Council’s recent move to bring several mass-consumption products under the 5 per cent slab was billed as a consumer-friendly step. Shoppers may indeed see lower price tags, but behind the scenes, the FMCG supply chain is recalibrating. Manufacturers, distributors and retailers say input tax credit (ITC) restrictions and embedded costs are squeezing margins and locking up working capital.
“At first glance, it looks like a win for buyers. But for us, it’s complicated,” said Shahab (name changed), a kirana store owner. “Earlier, when goods were taxed at 12 per cent or 18 per cent, we could claim ITC through the chain, from manufacturers to wholesalers to retailers.
Another kirana store owner in Bengaluru told businessline that earlier, when goods attracted 12 per cent or 18 per cent GST, ITC could be claimed through the chain, easing pressure on margins.
Read more at: The Hindu businessline
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