Transition Trouble

The government has allowed old packaging with new stickers or stamps to ease GST shift, but concerns remain

- By ANUBHUTI MATTA

THE GOVERNMENT'S CUT IN Goods & Services Tax (GST) rates has brought festival season cheer for consumers, but has raised fresh challenges for manufacturers, retailers, and distributors.

With concerns around existing stock and packaging that reflects old prices, the industry is now gearing up to manage a smooth and timely transition.

On September 3, the GST Council announced rates largely under two slabs—5 percent and 18 percent. While essential items were exempted, goods from the old 12 percent and 28 percent slabs were moved to lower rates and luxury and sin goods remained unchanged at 40 percent.

As a result, daily use items such as hair oil, shampoo, toothpaste, toilet soap bars, toothbrushes and shaving cream, which were earlier levied 18 percent, fell to 5 percent. Other items such as butter, ghee, cheese, dairy spreads, prepackaged namkeens, bhujia and mixtures will now see a drop from 12 percent to 5 percent.

Although the new rates will be effective from September 22, the duration isn’t enough for shelves to be stocked with products with new packaging.

What makes it even harder is that typically, manufacturers hold at least two to three months of inventory, and a large portion of packaging materials is pre-printed with the current maximum retail price (MRP).