GST: The Distributor Chaos

The upcoming GST has landed traders and distributors of consumer goods companies in a quandary.

- Ajita Shashidhar

Akbar Khan, the store manager of Barakah Beauty Solutions, a beauty products wholesaler and retailer in the busy Crawford Market of Mumbai, is a worried man. One can see customers swarming into the shop and making bulk purchases, but Khan is complaining about shrinking sales. “These are retail customers. The bulk of our business is wholesale, and that has dipped significantly ever since the Goods and Services Tax (GST) has been announced. Retailers, too, have nearly stopped buying or they are buying just what they need,” he says.

Khan, a wholesaler dealing in brands such as Lakmé, Nivea, Lotus Herbals and Shahnaz Husain, has also reduced his inventory by 20-25 per cent. Most of the beauty products, especially cosmetics and skincare goods, now fall under the 28 per cent slab under the GST (earlier, the tax was 2226 per cent) and he does not want to be stuck with surplus stock on July 1 when the new tax regime kicks in. “The MRPs (maximum retail price) will change, and we do not want to hold the old packs,” he says.

With the demonetisation fiasco largely an incident of the past and consumption finally back on track, the last thing that the trading community wants is a major disruption in the form of GST. Of course, the concept of uniform taxation across the country looks great on paper. But traders are hardly prepared for the complexities that followed – a zero tax rate plus four different tax slabs plus some cesses and more. In fact, there is confusion galore.