INDEX Sr. TITLE Page No no. 1 Introduction 1-18 1.1 | Introduction on GST 1 1.2. | Evolution of GST in India 2 1.3. | Types of GST 3 1.4 | Key Features of GST 5 1.5. | Introduction of FMCG 5 1.6 | Types of FMCG products 6 1.7 | Characteristics of FMCG 8 1.8 | Impact of GST on FMCG 10 1.9 | Leading FMCG companies 11 1.10 | Tax rates on FMCG before GST 12 1.11 | FMCG and E-commerce 17 2 Review of Literature 19-24 3 Research and Methodology 25-27 3.1 | Objectives of the study 25 3.2 | Sources of Data collection 25 3.3. | Scope of Study 25 3.4 | Sample Size 26 3.5. | Statement of the problems 263.6 | Limitation of the study 27 Data Analysis and Interpretation 28-47 Findings, Suggestions and Conclusion 48-50 References 51 ‘Annexure 52-55CHAPTER: 1 INTRODUCTION ON GST 1.1 Introduction on GST ‘The Goods and Services tax (GST) is the biggest and substantial indirect tax reform since 1947. The main idea if GST is to replace existing taxes like value-added tax, excise duty, service tax and sales tax. GST as it is known is all set to be a game changer for the Indian economy. India as world’s one of the biggest democratic countries follow the federal ect taxes are levied tax system for levy and collection of various taxes. Different types of in and collected at different point in the supply chain, The centre and the states are empowered to levy respective taxes as per the Constitution of India. The Value Added Tax (VAT) when introduced was a major improvement over the pre-exis 1g Central excise duty at the national level and the sales tax system at the State level. Now the Goods and Services Tax (GST) will be a further significance breakthrough- the next logical step- towards a comprehensive indirect tax reform in the country. GST is most ambitious and remarkable indirect tax reform in India’s post-Independence history. Its objective is to levy a single national uniform tax across India on all goods and services. GST has replaced several Central and State taxes, made India more of a national efficiency, it can add substantially to growth as well as government finances. Implementing a new tax, encompassing both goods and services, by the Centre and the States in a large and complex federal system, is perhaps unprecedented in modern global tax history. GST is a tax on goods and services with comprehensive and continuous chain of set-off benefits up to the retailer level. It is essentially a tax only on value addition at each stage, and ‘a supplier at each stage is permitted to set-off, through a tax credit mechanism, the GST paid on the purchase of goods and services. Ultimately, the burden of GST is borne by the end-user (.e., Final consumer) of the commodity/service. With the introduction of GST, a continuous chi of se-off from the original producer's point and service provider's point up to the retailer's level has been established, eliminating the burden of all cascading or pyramiding effects of an indirect tax system. This is the essenceof GST. GST taxes only the final consumer. Hence the cascading of taxes (tax-on-tax) is avoided and production costs are cut down, Presently, services sector in India constitutes a tax base with vast potential which has not been exploited yet. It is subsumed under it the context that GST is justified as it has almost all the services for the purpose of taxation, Since major Central and State indirect taxes have got subsumed under GST, the multiplicity of taxes has been substantially reduced which, in tum, would decrease the operating costs of the country’s tax system. The uniformity in tax rates and procedures across the country will go a long way in reducing compliance costs. In a nutshell, GST is a comprehensive indirect tax levy on manufacturers, sale and consumption of goods as well as services at the national level. GST is an indirect tax for the whole of India to make it one unified common market. GST is designed to give India a world class tax system and improve tax collection. It would end the long-standing distortions of differential treatment of manufacturing sector and services sector. GST will facilitate seamless credit across the entire supply chain and across all States under a common tax base. 1.2 Evolution of GST in India In 2000, the Vajpayee Government started discussion on GST by setting up an Empowered Committee, headed by Asim Dasgupta (West Bengal Finance Minister) to design the GST model. Thereafter, the Task Force on Implementation of the Fiscal Responsibility and Budget Management Act,2003 (Chairman: Vijay Kelkar) recommended the removal of all the inefficient and distortionary taxes so that India obtains the efficiencies of a single national tax, and suggested a comprehensive GST based on VAT principle. The idea of moving towards a GST was proposed in 2005 by the then Union Finance Minister, Chidambaram in his budget speech for the year 2005-06 where he observed that the entire production-distribution chain should be covered by a goods and services tax that encompasses both the Centre and the States. He reiterated his idea in 2006-07 budget speech and proposed April 1, 2010 as the date for introducing GST. Towards this objective, an Empowered Committee (EC) of State Finance Minister was to work with the Central Government to prepare a roadmap for introduction of GST. The final version of the report of EC was presented in the form of ‘A Model and Roadmap for Goods and Services Tax in India’ on April 30, 2008. After receiving comments on the report from Government of India and concerned officials of the State Governments and considering their recommendations, the EC releasedthe First Discussion paper on Goods and Services Tax in India on November10, 2009 to obtain the inputs of industry, trade bodies, and people at large. On 22" March,2011 the Constitution (115" Amendment) Bill was introduced in the Lok Sabha to operationalize the GST and enable Centre and States to make afier, on 19" December,2014 the Constitutional (122 Amendment) Bill, 2014 was introduced in the Lok Sabha to address various issues related to GST. It is not noteworthy that the introduction of GST required a Constitutional ‘amendment as the Constitution did not vest express power either in the Central Government or State Government to levy tax on the ‘supply of goods and services. While the Centre was empowered to tax servic and goods up to the production stage, the States had the power to tax sale of goods. Since the GST regime requires goods and services to be simultaneously taxed by both the Central and State Government, a Constitutional amendment was needed. ‘The Constitution (122" Amendment) Bill, 2014 was passed by the Lok Sabha on 6" May, 2015 after which the Rajya Sabha passed the Bill with 9 amendments on 3" August, 2016. The Lok Sabha then passed the modified Bill on 8 August, 2016. After getting approval of half of the States, it was sent to the President for his assent which was given on 8° September, 2016. Thus, the road to GST rollout was cleared and the process of enactment was completed. 1.3 Types of GST 1) State Goods and Services Tax (SGST) The State Goods and Services Tax or SGST is a tax under the GST regime that is applicable on intrastate (within the same state) transactions. In the case of an intrastate supply of goods and services, both State GST and Central GST are levied. However, the State GST or SGST is levied by the state on the goods and services that are purchased or sold within the state. It is governed by the SGST Act. The revenue earned through SGST is solely claimed by the respective state government. For instance, if a trader from West-Bengal has sold goods to consumer in West Bengal worth Rs. 5000, then the GST is applicable on the transaction will be partly CGST and SGST. If the rate of GST charged is 18%, it will be divided equally in the form of 9% CGST and 9% SGST. The total amount to be charged by the trader, in this case, will be Rs.5900. Out of the revenue earned from GST under the head of SGST ice., Rs.450, will go to the West Bengal state government in the form of SGST.2) Central Goods and Services Tax (CGST) Just like State GST, the Central Goods and Services Tax or CGST is a tax under the GST regime that is applicable on intrastate (within the same state) transactions. The CGST is governed by the CGST Act. The revenue earned from CGST is collected by the Central Government. As mentioned in the above instance, if a trader from West Bengal has sold goods to a consumer in West Bengal worth Rs. 5000, then the GST applicable on the transaction will be partly CGST and partly SGST. If the rate of GST charged is 18%, it will be divided equally in the form of 9% CGST and 9% SGST. The total amount to be charged by the trader, in this of CGST, ie., Rs.450, will go to the Central Government in the form of CGST. will be Rs. 5,900. Out of the revenue earned from GST under the head 3) Integrated Goods and Services Tax (IGST) ‘The Integrated Goods and Services Tax or IGST is a tax under the GST regime that is applied on th erstate (between 2 states) supply of goods and services as well as on imports and exports. The IGST is governed by the IGST Act. Under IGST, the body responsible for collecting the taxes is the Central Government. After the collection of taxes, it is further divided among the respective states by the Central Government. For instance, if a trader from ‘West Bengal has sold goods to a customer in Karnataka worth Rs. 5000, then IGST will be applicable as the transaction is an interstate transaction. If the rate of GST charged on the goods is 18%, the trader will charge Rs. 5,900 for the goods. The IGST collected Rs. 900, which will be going to the Central Government. 4) Union Territory Goods and Services Tax (UTGST) ‘The Union Territory Goods and Services Tax or UTGST is the counterpart of State Goods and Services Tax (SGST) which is levied on the supply of goods and services in the Union Territories (UTs) of India. The UTGST is applicable on the supply pf goods and services in Andaman and Nicobar Islands, Chandigarh, Daman Diu, Dadra and Nagar Haveli, and Lakshadweep. The UTGST is governed by the UTGST Act. The revenue earned from UTGST is collected by the Union Territory government. The UTGST is a replacement of the SGST in Union Territories. Thus, the UTGST will be levied in addition to the CGST in Union ‘Territories,1.4 Key Features of GST 1. Dual Goods and Service Tax: CGST and SGST. Destinations — Based Consumption Tax: GST will be a destination- based tax. This Implies that all SGST collected will ordinarily accrue to the State where the consumer of the goods or services sold resides 3. Computation of GST based on invoice credit method; the liability under the GST will be invoice credit method 1.e convert credit will be allowed in the basis o! voice issued by the suppliers. 4, Payment of GST; The CGST and SGCT are to be paid to the accounts of the Central and State respectively. 5. Goods and Services Tax Network (GSTN): A not-for-profit, Non-Government Company called Goods and Services Tax Network (GSTN), jointly set up by the Central and State Governments will provide stared IT infrastructures and services to the Central and State Governments, tax payers and other stakeholders. 6. GST on Imports: Centre will levy IGST on Inter- State supply of goods and services. Import of ‘gods will be subject to bas jc customs duty and IGST. 7. Maintenance of Records: A taxpayer or exporter would have (o maintain separate details in books of accounts for Av ailment, utilization, or refund of Input Tax Credit of CGST, SGST and IGST. 8. Administration of GST: Administration of GST will be the responsibility of the GST Council, which will be the apex policy making body of the GST. Members of GST Council comprised of the Central and State ministers in charge of the finance portfolio. 9. Goods and Service Tax Council: The GST Council will be a joint forum of the Centre and the States. The Council will make recommendations to the Union and the States on important issues like tax rates, exemption list, threshold limits, etc. One-half of the total number of Members of the Council will constitute the quorum of GST council. 1.5 Introduction of Fast-Moving Consumer Goods (FMCG) Consumer Packaged Goods (CPG) is another term for fast moving consumer goods (FMCG). This category includes all consumable things that consumers buy on a regular basis. Shampoos, hair oils, bathing soaps, toothpaste, cosmetics, and other common natural organic items use ordinary consumable products. The subjective (individual) tastes of distinct bundlesof products, as assessed by utility, are defined as consumer buying behaviour. They allow customers to rank these bundles of items according to the amount of utility they provide These are measured in terms of the consumer's level of pleasure after consuming various combinations or bundles of commodities after GST. The goal of the consumer is to select the package of goods that delivers the highest level of satisfaction, as defined by the consumer. Consumers, on the other hand, are severely limited in their options. The Consumer's income and the prices he or she pays for goods after GST define these limits. We will formally introduce the consumer choice model. Fast-moving consumer goods (FMCG) sector is the 4" largest sector in the Indian economy. This includes manufacturing and selling of food products, households, and personal care products, Together FMCG companies are generating remarkable employment in the economy. The Indian FMCG sector has strong presences of leading multinational companies and unorganised players with well distribution yystem with lowest operational cost. The growth of FMCG sector products is extensive in India as it has captured most urbanized population and at the same time reached to the interior rural areas. Looking at the growth and development of this sector, Indian governments have put special measures to regulate FMCG sector including the FMCG sector including the FMCG market. Some recent measures are , food safety bill, FDI in 100% in retail, ete. These measures have consumer protection well accepted and so far, shown some positive impact on the growth of FMCG sector. But the recent introduction of Goods and Service Tax (GST) has got an unexpected reaction from the sector. Although customary and widely used, the term “fast-moving consumer goods” (FMCG) lacks a clear definition and a regularly used in India to refer to ordinary products. In general, though, the word refers to things that move quickly and are used directly by the consumer. As a result, there is a major discussed between the term’s widespread use and its conceptual meaning, FMCGs are critical to the industry since they account for the majority of customer demand and, as result, expenditure. This is true for every lone state on the planet. The retail and wholesale sectors of the market are the target sector for FMCG. This is due the fact that FMCG is always a necessary commodity for customers. As a result, the primary responsibility of FMCG in the market is to ensure that the supply of FMCG remains consistent. 61.6 Types of FMCG Product Fast-moving consumer products, as defined above, are nondurable goods with a short lifespan that are consumed at a rapid fast rate. They are usually broken up into different types depending on the industry they are sold in * Food and Beverage Food and Beverage products are usually fall into the FMCG category due to their short life span and high tumover rates. Types of food and beverage products that are usually classed as FMCGs include but are not limited to: Processed food, such as bread, pasta, and potato chips. Ready to eat food, such as packets of nuts or crisps. Beverages, such as bottled water, coffee cups and cans of soda * Personal Care Products: Personal care products, such as shampoo and toothpaste, can also be classed as FMCGs because they are need frequently by most consumers, usually bought at a low cost, and not built to last. These include lotions, hair dyes, lipsticks, cosmetics, deodorants, bath soap, dental care products, etc. © Healthcare Products Healthcare products are also classed as FMCGs because they are usually highly demanded, not built to last and very distributed. These include products like plasters, bandages, syringes, ete. + Home care products Products that are used for household purposes also fall into this category because they are usually standardised, low durability goods that are highly distributed and sold at a usually low unit price. They include cleaning products kitchen towels, toilet rolls, bleach, dusters etc. FMCG are classified into various categories: Processed foods: Cereals, Cheese products, and boxed pasta Prepared meal: Ready-to-eat mealsBeverage: Energy drinks, Bottled water, and Juices Baked goods: Croissants, Cookies, and bagels Fresh, and dry good: Fruits, frozen peas, vegetables, raisins, and nuts Medicine: Aspirin, pain relievers, and other medication that can be purchased without a prescription Cleaning products: baking soda, oven cleaner, and window and glass cleaner Cosmetics and Toiletries: Toothpaste, Hair care products, soap, and concealers Office supplies: Pencils, Pens, and markers 1.7 Characteristics of FMCGs There are some key characteristics that define FMCGs products and separate them from other types of products. These are From the consumer perspective: Highly availability FMCGs products are usually widely available and sold in several stores and supermarkets worldwide. This allows consumers to purchase these products are easily without too much trouble. Purchased frequently FMCGs include products that consumer frequently require, usually daily or nea example, breads and coffee are generally bought at least once a week. Low buying effort FMCGs are usually low effort purchases for the consumer. For example, with shampoo, most people know that they prefer a particular brand or type without testing it. This means that want to buy it straight away. Low cost FMCGs are usually inexpensive compared to other products on the market, therefore taking up a smaller proportion of consumer's income. 8+ Rapid consumption: ‘The time between buying the product and consuming it is very short, often only several hours. For example, a loaf of bread might be purchased in the lunchtime that same day. From the retailer perspective: © High turnover rate FMCG sales are higher than other product type’s sales as they are purchased frequently by consumer. This means that retailers can keep inventory for these products for shorter periods of time, which ultimately reduce costs. * Highly distributed Since these goods have demand and low cost, they usually need to be widely available and distributed across ferent locations and regions. For instance. There might be several different supermarkets in a town that all sell the same bread brand. © Low unit cost As FMCGs have a high demand and low cost, they usually have a low unit price of consumers. This means that ret lers can sell these products at a low price and still retain the same profit margin. This is different from luxury items that usually have a high unit cost but lower demand, meaning that they must be sold at a higher price to maintain the retailer's desired level of profit. * Non- durability FMCGs are not built to last. This is because they have a short time span from production until consumption, They are also required in large quantities so manufacturers do not need to preserve them for long periods of time, which allows them to be sold at lower prices. * Consistency in form, size, colour and price FMCGs are standardised, which allows them to be produced cheaply in, bulk quantities. For example, if a manufacturer produces packets of shampoo, they are all the same size and contain the same amount of liquid. This means that when one purchases a packet of shampoo from their local store, they know exactly what they are getting.1.8 Impact of GST on FMCG Sector ‘The majority concentration is on overall impact of GST and comparative of tax gains and losses in Indian FMCG sector before and after Implementation of GST. Indian tax system was wider before implementing GST. The tax divided into 2 groups ie., direct tax and indirect tax. Introduction of the Value Added Tax (VAT) at the Central and the State level has been a main step —a major step forward- in the globe of indirect tax reforms in India. If the VAT is a major development over the pre-existing Central excise duty at the national level and the sales tax system at the State level, then the Goods and Service Tax (GST) will really be an additional important perfection- the next logical step — towards a widespread indirect tax reforms in the country. Initially, it was conceptualized that there would be a national level ‘goods and service tax, however, with the release of First Discussion Paper by the Empowered Committee of the State Finance Ministers on 10.11.2009, it has been made clear that there would be a “Dual GST” in India, taxation power- both by the Centre and the State to levy the tax on the Goods and Services. Almost 150 countries such as Singapore and New Zealand tax virtually everything at a single rate, Indonesia has five positive rates, a zero rate and over 30 categories of exemptions. GST is giving positive and negative effects on over all sectors. Food industry having the negative impact, housing and construction industry having the positive impact, and etc. All sectors of economy viz., bid, medium, small-scale units, intermediaries, importers, exporters, traders, professionals, and consumers shall be the directly affected by GST. Under GST the taxation burden will be divided equability between manufacturing and services through lower tax rate by increasing tax-based exemptions. GST applies only to goods and the provision. The FMCG sector is a one of the largest sectors in India. This sector mostly represented packaged goods and other consumer durables. The FMCG sector growth depends on some key drives they are charging lifestyle, easier to access the technology, increasing the income levels, etc. Indian FMCG sector includes house hold, personal care, food and beverages and others. The GST is not applicable of alcohol liquor for human consumption. Food and beverages segment is the largest share in Indian FMCG sector. In s the world’s second largest producer for food. Positive Impact: # Reduced logistics cost * Greater efficiency in supply-chain management 10* An uptick in consumption Negative Impact: © Transitional credits « Frequently changing rates © Anti-profiteering issues 1.9 Leading FMCG Companies in Food & Beverage Segment along with key product ITC Ashirwad, Sun feast, Bingo! Yippee! Kitchens of India, B Natural, Candy man ‘Amul ‘Amul Milk, Cheese, Ice Cream, Mithai Range, Chocolates, Butter milk and Beverages Parle Frooti, Café Cuba, Hippo, Mazza, Argo Parle-G, Melody, Mango Bite, Poppins, Kismi Toffee Bar, Moanoca and Crack Jack Britannia Dairy products, Biscuits (Vita Marie Gold, Tiger, Nutri Choice Junior, Good day, 50-50, Treat, Pure Magic, Milk Industries Bikis, Good Moming, Bourbon, breads etc. Nestle Nescafe, Kit Kat, Maggi ete. ceaFood and beverages segment has one of the smallest shares in E-commerce market. However, due to change the consumer shopping habits presently significant growth having witnessed in purchase of food and beverages through online like big basket India is known to have a long heritage of personal care products. Personal care product, segment in India is estimated to be worth of US $17.4 billion in 2018. Personal hygiene products such as bath and shower products, deodorants, etc, hair care, skin care, colour cosmetics and fragrances are the key segments. Lower price and small quantities offered by s have improved the peace of saturation FMCG personal care products. the compani Increasing literacy levels, government welfare programme and support the agriculture sector and increasing the technology these are the drives of boosting the rural demand of the FMCG personal care segment. Leading FMCG Companies in household Segment. HUL Wheel detergent, Cid Cream Cleaner, Comfort fabric, softeners, Domex disinfectant, Surf Excel detergent, Vim etc. Reckitt Lysol, Air Wick, Mortein, Harpic, Benckiser ete Rohit Xpert Ula Gel (Liquid), Ghart Surfactants Detergent Powder, Ghari Detergent Cake, ete P&G Ariel, Tide, Ambi Pur, ete Indian FMCG companies such as ITC, Patanjali, Amul, Godrej, etc. have witnessed a higher profit to compare with foreign brands namely HUL, GSK, Nestle, etc. Indian companies have nproved their product portfolios, supply chain, and market share through non-living growth. Indian FMCG companies have focused on increasing their charisma in idle markets such as Ayurvedic products. Other factors such as new product developments, pricing decisions, increasing international business have also helped these companies to improve their presence compared to the multinational firms. 1.10 Tax rates on FMCG Products before GST 2FMCG has many taxes like VAT, Excise duty, central sales tax, service tax. Before implementing of GST, the tax rate is 22-249. The tax on detergents was 23% while sanitary napkins used to be taxed at the rate of 10-11%. Skincare products including shampoo were taxable at 24-25% standard rate, Butter, ghee, cheese used to be taxed at the rate of 4-5%. The average tax rate on FMCG products before GST was not more than 25%. Post GST on FMCG Sector GST was introduced the five standards of tax levels they are 0%, 5%. 12%. 18%, and 28%. Under new tax regime, the average tax on FMCG products is in the range of 18 to 20 percent, which is clearly lower than the previous tax system. Many of FMCG products and services are lower under GST. It is benefit to the end customer. The logistics cost also reduces under GST, distribution system having the low cost under implementing the new taxation, Overall, the storage and transportation cost of goods and service having low under GST. The products are widely consumed broad range of hair oils, toothpastes, soaps under 18% of slab, which is lower than the previous tax rate i.e., 22-24%. The branded paneer and frozen vegetables have under 5% tax rate, it is more from previous tax rate 3-4%. Most of the items are in the 18% slab group Detergents, shampoos, skin care and hair dyes these are the 28% slab, it is higher than the 24-25% tax rates. No tax on basic products like milk, cereals, and eggs would allow people to literally spend on these items. The total previous tax rate for the FMCG sector was around 22-24%, The new tax system (GST) for the FMCG sector is an average of 18-20% The following are the Slab rates on various food items: Slab Items Rate Daily consumption items like fresh fruits and vegetables, 0% fresh meat, chicken, fish, eggs, milk, curd, buttermilk, flour, bread and natural honey Frozen vegetables & fruits, spices, tea, coffee, skimmed 5%, milk powder, rusk, sabudana, cashew nuts in shell, raisins, packaged foods, pizza bread, branded panner. 12% Butter, cheese, ghee, animal fat, frozen meat products, sausages, packaged dry fruits, ketchups and sauces, namkeen, fruit juices 2BCakes and pastries, biscuits, comflakes, instant food 18% mixes, jams, salad dressings, mixed seasonings and condiments, soups and ice creams. 28% Chocolates not containing cocoa, chocolate coated wafers and waffles, aerated water and drinks Some of the reputed FMCG companies like HUL, Patanjali, Dabur and ITC in India have started transitory on the benefits of reduced tax to their customers, These benefits of reduced tax to their customers. These benefits passing to different form i , reduce the prices or by increasing the amount of product for the same price. Always the lower cost has encouraged the people to invest/ spend more in FMCG sector. This will help to the reducing the cost of living. The FMCG companies deal in dry fruits, dairy-related products and ete it will also have a deal with the higher tax rate on their products. Under GST the macro level companies that deal in these supplies are enjoying the benefits of GST. Beverages have been given the highest rate slab of 28% under GST, with cess 12% e tax rate for the According to the different Beverage companies, 40% is the effe sweetened aerated water and flavoured water, which is not in line with the stated policy of maintaining uniformly with the existing weighted average tax that is below 40%. This has been very disappointing for different companies like Coca Cola India, Dabur India Ltd, Red Bull India Pvt. Lid, Pepsi Co India Holdings Pvt, Ltd, and Pearl Drinks Ltd, as stated by the Indian Beverages Association (IBA) The new tax rates under GST impact major products and companies with in the sector: Product Before GST After GST ‘Companies Detergents 2806 18% HULP&G, Jyothy Shampoo 2896 1896 HUL P&G, Dabur, Himalya, Patanjali Hair Dyes 23-28% 18% Godrej Consumers Products Skin Care 28% 18% HUL, Dabur, 4Himalaya ‘Ayurvedic 7-10% 12% Dabur Emani medicine Branded paneer 34% 5% Nestle, Mother Dairy Butter, ghee 45% 12% ‘Amul, Nestle Large retail outlets have started advertising the downward revised prices of FMCG items on account of GST tax rates. Tax rate on items such as coffee, custard powder, dental hygiene products, polishes and creams, sanitary ware, and washing powder, razors and blades, has been cut from 28 percent to 18 percent. ‘This sector consists of more than 50% of food and beverage industry and around 30% of personal and household care thereby including the entire urban as well as rural parts of India. Under the pre-GST regime, the distribution cost of the FMCG sector accounted for 2 to 7%, which may fall to 15% after the complete implementation of GST. An enormous impact and changes in terms of decrease cost due to the tax payments, smoother supply chain management, claiming input credit, under the GST Scenario. This result will lead to cheaper consumer goods. All FMCG companies said that GST will help boost rural demand. FMCG companies decided to reduce the MRP and added extra quantity in the line of GST reduction, and provide the additional discounts to their trade partners. The FMCG companies are decide to passing the benefits of reduce the tax rates to their consumers. They are also re design the MRPs of previous products and fresh products under GST slabs. The union budget 2018 is also gave the boost in the macro level firms having the benet nmediately but micro level companies waiting for the benefits of GST under long run, Some of the FMCG companies having the gains of Under GST. The consumer also their income on those purchases bur some of the products are having higher tax rates so the people lose the benefits. GST rate, Pi items and packaged snacks and drinks. before GST and Price after GST of Essential food Essential food items Item Price/unit | Total taxes GST rate | Price after GST 15before GST | (% on pre-tax price) Milk Rs. S4/hitre 0 RS34 Vegetable | Rs. 50/kg 0 RS50 & Fruits Bread Rs. 40/pack 0 R840 Basmati RS.75/kg 0 R875 tice Atta RSSSIkg 0 0 R855 Pulses Rs.100/kg 0 0 Rs.100 Packaged | Rs.190/pack 10.29 5 RS.143 tea/coffee Packaged | Rs350/pack 9.08 2 S359 chicken Edible oil | Rs.125/litre 16.82 18 RS.126 Packaged snacks & drinks Item Price/unit Totaltaxes [GSTrate | Price after beforeGST —_| (% on pre-tax GsT price) (Assuming same base) Rs.10/pack 5 12 RO RS350/kg 9.03 5 R837 RS302.51kg 9.03 12 Rs310 Rs.10/pack 42.86 28 Rs9 gum Chocolate Rs.20/pack 33.33 18 RsI19 Com Flakes | Rs.150/pack 32.74 18 Rs.134 Cold drinks S20 53.85 28 Rs18 Juices Rs.30/pack 15.38 12 Rs2 161.11 FMCG and E-Commerce Increased reliance on online purchasing, as well as improved infrastructure and living standards, has provided FMCGs with new distribution channels and prospects. Shoppers all over the world are increasingly buying products they need online because it provides advantages that traditional retailers cannot, such as doorstep delivery, a large section, and reasonable costs. The online market for grocery and other consumable products is expanding as companies rethink delivery logistics efficiency to reduce delivery times. While non-consumables may continue to outnumber consumables in terms of volume, improvements in transportation efficiency have expanded the usage of e-commerce channels for FMCG acquisition, Influence on Prices FMCG goods are sold to the end consumers based on Maximum Retail Price (MRP) which is inclusive of all taxes, including the GST. Any reduction in rate of tax on any supply of goods and services, or the advantage of input tax credit shall be passed on to the recipient by way of commensurate reduction in prices, according to Section 171 of the CGST Act, 2017 which provides How E-commerce Trends will positively impact FMCG business. Digital innovation and the growth of e-commerce has led to the emergence of several new differentiated players in the market who are giving st f competition to existing player business models optimised to serve the rising demands of the present consumers, these players are expected to contribute to more sales for the FMCG sector over the coming years. Apart from that, new and existing players are re-inventing their business processes by forming links with stable and bigger e-commerce businesses. New e-commerce start-ups also helping local Kirana stores to expand their operational foot-print through digitisation. With the development of e-commerce platforms for grocery stores and local retailers aggressively underway, it is further going to contribute to sales and overall business growth in the FMCG sector. As a growing number of consumers are opting for contactless and safe delivers through e-commerce channels, online platforms, as well as local neighbourhood stores, are also witnessing an up stich in demand. Enhanced product information and valuable reviews are some of the other factors that are driving consumers towards online shopping. The landscape pf shopping has dramatically transformed very the last few months. While retail v7still holds a lot of significance e-commerce has taken off and is expected to further aid FMCG brands in driving sales, increasing market share, and attracting new customers. With e- commerce encouraging a direct- to- customers (D2C) model, FMCG businesses are benefitting in different ways such as; Better Monitoring- It becomes difficult for companies to monitor their product once it hits the shelves. While retailers remain aware of how a brand is perceived by customers but manufacturers remain oblivious to it. With the D2C model, the gap is bridged wherein companies have better knowledge of what customers perceive and more control over message and packaging marketing, Quickly Reach out to consumers- With the help of the D2C model, companies can reach out to consumers quickly with their products as compared to earn higher profits as no middlemen are involved. Also, D2C helps businesses to reach out to their customers in small quantities initially, and depending on market reaction, make necessary adjustments, to cut down their risk. 18.CHAPTER -2 REVIEW OF LITERATURE « Akanksha Khurana, Aastha Sharma, Research Scholar, Department of E.A.F.M., University of Rajasthan, Jaipur (2016) ve reform for indirect tax Her topic is about Goods and Service Tax in India- a posit system, The Goods and Service Tax (GST) is the largest indirect tax reform since 1947. The main idea of GST is to cascade existing taxes like value-added tax, excise duty, service tax and sales tax. It will be imposed on manufactured sale and usage of goods and service. Her paper highlights the environmental domain, objectives of GST and the impact of GST in the current tax scenario in India. Her paper also explained about multiple benefits and opportunities of GST and at the last her paper concluded about GST. She also briefed about the Rate of GST of (Some Countries) Country Rate of GST in Australia by 10%, in France 19.6%, Canada 5%, Germany 19%, Japan 5%, Singapore 7%, and Sweden 25% and in New Zealand by 15%. In her conclusion she discussed that GST will provide relief to producers and consumers by providing wide and complete coverage of input tax credit set-off, service tax set off and carrying the various taxes. Systematic formulation of GST will lead to resource and profit generation or both Centre and States majorly through widening of tax base and improvement in tax reforms. She further concluded that GST has a positive impact on various sectors and industry. The formation of GST requires a lot of efforts of all stakeholders and necessary steps should be taken accordingly. * Dr. R. Rupa Associate Professor, SCMS School of Technology and Management, SCMMS Campus, Pratap Nagar, Muttom, Alva, Cochin- 683 106 (2017) She talked about the three models of GST which is about State GST, Central GST and Dual DST and the advantages and disadvantages of GST and in her report, she mentioned about lot of other things about the India’s tax regime which relied heavily upon the indirect taxes and the revenue from these indirect taxes was the major source of tax revenue till tax reforms ‘were undertaken during nineties. The major argument for heavy dependence on indirect taxes was that the majority of population of India is poor and this widening the base of direct taxes 19which have some limitations. But the Indian system of indirect taxation is characterized by multiple and distorting tax on the production of goods and services which leads to distorting the productivity and lowering of economic growth. She also discussed about the endless axes in current system out of which some are imposed but the Sate and rest levied by Centre, to remove this multiplicity or cascading effect of taxes and lowering the burden of the tax payer for that a simple tax is required and that is the Goods and Service Tax (GSTO. This paper throws light into the concept of Goods and Service Tax, advantages, disadvantages etc. * Parveen Kumar (Assistant Professor, Department of Business Administration Chaudhary Devi at University, Sirsa, Haryana, India) (2017) Like others Praveen Kumar also briefed about the Goods and Services Tax (GST) which is a very big thought that simplifies the concept of large tax structure by supporting and enhancing the economic process of a country. GST is a comprehensive tax levied on manufacturing, sales and acquisition of goods and services at a national level. GST is designed to change from the indirect taxes obligatory onto the goods and services by the Centre and States. His paper presents an outline about GST concept, he also explained about its features along with timeline of GST implementation in India. He also discussed about the following things like: Who must pay GST? GST- How it works in India? He als included the components, applicability, credit payment, comparison of past tax structure and GST tax. At the last he also concluded that the taxation plays a significant role in the development of the economy. From the above discussion we can conclude that the GST will bring One Nation and One Tax Market in the economy. The GST system is basically structured to simplify the Indirect Taxes like Sales Tax, VAT got eliminated, As compare to past tax system in India the GST system in very easy. The present GST system also simplifies the tax related problems for the entire economy. 20© Subhuman Banik, Advocate Arundhuti Das (Assistant Professor, Dept. of Commerce and Management, K.K. University, Nalanda, India) and (Assistant Professor, Dept of Law, K.K Universit ,, Nalanda, India) (2017) GS of Goods and Services Tax is the biggest tax reform in India sine Independence which was pending. GST is meant to simplify the indirect tax regime of India by replacing the cascading effect of taxes by a single unified tax. It is the only indirect tax that directly connects all the sector of Indian economy by improving the economic growth of the country by creating the market as unified. More than 60 countries of the world have enforced GST followed by France, the idea of GST in India was initiated by Atal Bihari Vajpayee in 1999. It was supposed to be executed from I April, 2010 under the flagship program of P. Chidambaram then the finance minister of UPA government but due to some political issues of various stakeholders it did not came gets enforced. He also said that there is a huge outery against its implementation. This paper presents an overview of GST concept and many more. At the end he concluded that the Goods and Services Tax (GTS) is an attempt which is not considered by the government to justify the indirect tax structure of the country. The government should study the GST mechanism which is set up by various countries across the country and their limitations before its amendments. Undoubtedly GST had simplified the already existing indirect tax system and helps to overcome the multiple effect of tax. The bill was introduced to implement unified tax but unfortunately it gets converted into a pitfall as the price of basic goods and services had got increased. The economy is lowering due to unplanned implementation of GST. The possible solution for this problem is to make this charge to GST simpler and transparent. * R Hire Mani Naik, Sudan TA, “A STUDY ON PERSPECTIVE IMPACT OF GST ON FMCG SECTOR IN INDIA,” December 2017, for i ternational journal of research in Business studies. The fast-moving consumer goods (FMCG) segments are the fourth largest sector in the Indian economy. The sector is likely to see a significant impact once the goods and service tax (GST) bill is passed as the companies set warehouses across the states in a bid to have a more tax efficient system. FMCG is one such sector directly having its impact on the large public. It is very important to study the possible positive and negative impact of GST implementation on the FMCG sector. The research paper analyses how GST would impact on Indian tax ascenario. The authors have given a brief history of Indian taxation and its. structure. Background of GST outside India as well as in India if also discussed. Authors concluded that GST would be beneficial for the industry and the consumer. It would lead to an increase in revenue for the government. The research paper talks about the impact of goods and service tax on Indian industries, with reference to FMCG sector, which will give the overall idea about the positive and negative effects of GST. * Dr, Namita Mishra, Associate Professor, Tecnia Institute of Advanced Studies 92018) She briefed about GST that is a single national constant tax demanded across India on all Goods and Services. In GST, Indirect taxes such excise duty, central sales tax (CST) and Value Added Tax (VAT) etc. will be involved under a single domain. Implementation of the Goods and Services Tax (GST) expected as an important step toward a complete indirect tax reform in the country, which will help India towards its economic growth. The study is designed to know the effect of GST on Indian Economy with the help of its effect on various sectors. The study consists of secondary data for the study. Her data is collected from various journals, periodicals, internets, and newspapers. She discussed about Arun Jaitley the finance minister of India who said that GST is going to be a big step towards the unification of informal economy and it will help in the increment of the transactions which are covered in the banking system transactions. He also said that “A new India has emerged it is certain with growth in level if demand and with this the level of supply will also increase. Namita also explained that the unified taxation system would stimulate new businesses and entrepreneurs to engage in service and manufacturing sector. At the last she also concluded that the GST which is imposed only on consumption of goods and services makes this concept simple and transparent. This leads to reduce economic distortions in taxation amongst states and aid in free movement of goods, it also reduces the issues of taxation. It will also benefit the individuals as the prices will get reduced due to GST and reduction oin price leads to increment in consumption and will directly increase the GDP. As ates which is lacl implementation of GST applied at a time for all the s 1g with policy barrier will be removed. GST will directly increase the investments in FDI’S due to which there will be the increase in the foreign exchequer of the country which will indirectly increase the employment opportunities it will also leads to the promotion of new start-ups in India. 22Rajkumar Chandran, September 2017, “A STUDY ON IMPACT OF GOODS AND SERVICES TAX ON INDIAN INDUSTRIES” with reference to FMCG sector, an international journal of Innovative Research in Management studies. India’s most awaited and biggest tax reforms have come into reality, the Goods and Service tax (GST) which has replaced most multiple indirect taxes which were used to be levied on different items of goods and services. The GST gas helped in terms of revenue from the past two months, hence it has been affected by 01.07.2017 and helped in solving the cascading effects of the tax. GST has emerged into transparency in the indirect taxation of the country. Taxation and its associated governing laws, in the current sicario, are playing a vital role in business industries, individuals also for the government for the betterment of policies for social good. The research paper talks about the impact of goods and service tax on Indian industries, with reference to FMCG sector, which will give the overall idea about the positive and negative effects of GST. India’s most awaited and biggest tax reforms have come into reality, the Goods and Service tax (GST) which has replaced most multiple indirect taxes which were used to be levied on different items of goods and services. The GST gas helped in terms of revenue from the past two months, hence it has been affected by 01.07.2017 and helped in solving the cascading effects of the tax. * Pallavi Kapila Assistant Professor, Department of Sociology, MCM DAV College for ‘Women, Sector 36, Chandigarh (2018) Pallavi talked about GST and its Impact of Indian Economy and she stated that GST stands for “Goods and Services Tax” which is executed by the Government of India since 1% April, 2017 this year. Its introduction by the Constitution Act, 2016 was obey of the most important steps in the domain of indirect tax reform structure of India. Therefore, GST was defined as a complete consumption-based tax imposed upon manufacture, sale, and consumption of goods as well as services which helped in changing the country into unified similar market. Many arguments were raised about GST after its implementation. ‘The research paper will throw ng issues of taxes in India as it carries the Value Added Tax (VAT), Excise Duty, Service Tax some light on how Goods and Services Tax (GST) would help in decreasing the exi and Sales Tax. The first phase of the paper talks about in Indian economy. At the last section will focus on conclusion part of the paper. 23He concluded that the enforcement of GST has played a vital role n the growth of Indian economy. A unified and transparent taxation system in Indian would lead to lesser disruption in the market economy and more efficient distribution of resources within the industry apart from this it would also lead to the growth in the Gross Domestic Product (GDP). © Dr. Mohan Kumar, CA Yogesh Kumar, “GST AND ITS PROBABLE IMPACT ON THE, FMCG INDUSTRY IN INDIA,” for the international journal of research in finance and marketing ‘This paper analysis the impact of FMCG industry. The fast-moving consumer goods (FMCG) sector of Indian consumption more than 50% of the food items and beverage industry. And another 30% from personal and household care. Presently the peak tax cost for industry players amount to approximately 27% i.e. (excise duty of 12.5% and VAT ranging from 12- 15% under the GST regime, it’s proposed that the revenue neutral rate would be in the range of 16-19%. There is a mixed response, inexplicit, arguments and opi ns_among manufacturers, traders and society about the Goods and Services Tax to be implemented by Government of India from 01.04.2017. Various news organisation from all around the world focused on the bill unifying the country and it is an achievement of the Government. As GST bill was passed in Rajya Sabha it also brought India at the centre of the global economy. The paper highlights the background, prospectus, and challenges in the implementation of GST in India. Impact of GST on FMCG first will depends on their product mix, given that the tax, rules have gone up for some products and have fallen for others. The FMCG companies whose tax incidence has cane down under the GST regime, are likely to pass it on the consumers in the form of lower prices. However, few firms in the sector are diversely affected by the tax rate charged on their products. 24CHAPTER- 3 RESEARCH METHODOLOGY 3.1 Objective of the study Research is an organised investigation of a problem in which there is an attempt to gain a solution to the problem. To get right solution to the right problem, clearly defined objectives are very important. Clearly defined objectives enlighten the way in which the researcher must proceed. A research objective is a clear, concise, declarative statement, which provides direction to investigate the variables. Generally, research objectives focus on the ways to measure the variables, such as to identify or describe them. Sometime objectives are directed towards identifying the relationships or difference between two variables. Research objectives are the results bought by the researcher at the end of the research. process, i.e., what the researcher will be able to achieve at the end of the study. The objectives of a research project summarize what S to be achieved by the study. Objectives should be closely related to the statement of the problem. The objectives include answers to the research questions or testing the research hypothesis, The Objectives for this study are: To analyse the impact of changes in the tax rates of fast-moving consumer goods on consumers. To understand the concept of GST on FMCG products. To study the comparative effect on FMCG products before and after introduction of GST. 3.2 Sources of Data Collection This study is based on ary and secondary data: Primary Sources: Primary data is collected through a survey method by distributing a questionnaire to the consumers of FMCG products. The questions were carefully designed 25by considering the parameters of my study. A survey was conducted with a sample size of 63 respondents. 2, Secondary Sources: To make the primary data collection more specific, secondary data will help to make it more useful. Secondary Data is collected from books, websites and journals. 3.3 Scope of the study India has implemented GST on 1.7.2017. GST is a real game changer and it will lead to complete over haul of current indirect tax system. GST includes tremendous changes in the various sectors of the economy. It will affect all the industries irrespective of a single sector. FMCG segment in the fourth largest in the Indian economy. For doing the data analysis, FMCG products has been chosen in order to analyses the effect of GST had on the consumers. The prices of the product before and after GST has been retrieved and compared, to do a detailed study on the effect that GST had on the consumers. 3.4 Sample Size The Random Sampling Technique has been used for collecting data from different consumers. This survey was conducted with a sample size of 63 respondents. These respondents have been purchasing Fast Moving Consumers Goods (FMCG) for a period of time. 3.5 Statement of the Problem The research is undertaken to seek out people perceptions on GST on FMCG. Since GST has been there for several years, there are many study in these area. As the implementation of GST people have experienced a price hike in FMCG products. Lastly, to know the ‘ociation between the demographical variables like gender, age group, education qualification, occupation and other factors on decision for buying FMCG products 263.6 Limitation of the study. The limitation of a study are its flaws or shortcomings. Study limitations can exist due to constrai 'S on research design, methodology, materials, etc. and these factors may impact the findings of your study. There is a limited period to acquire responses Difficult to analyse what the individuals think about the impact of GST on FMCG sector when majority of people were unaware of the same. Itis difficult to gather information from the people. Inherent limitations of Primary Data. A high rate of non-response bias. tis inflexible and cannot be changed once sent. Since all the products and services are not widely used by all the customers it is difficult to draw realisti -onclusion based on the survey. a