PROJECT REPORT ON

IMPACT OF GST ON FAST MOVING CONSUMER GOODS (FMCG)

Submitted in partial fulfilment of the requirements

for the award of the degree of

BACHELOR OF COMMERCE (HONS)

to

Guru Gobind Singh Indraprastha University, Delhi

Submitted to Submitted by

Dr. Nitu Maurya XXXXXXXX

Faculty, KCCILHE Sem- B.comVI

Enrollment No-XXXXXXX

KCC Institute of Legal and Higher Education, Greater Noida

Affiliated to GGSIPU (Guru Gobind Singh Indraprastha University),

Dwarka, New Delhi – 110037.

1
 UNDERTAKING BY THE STUDENT

I XXXXXXXXXXX , student of BCOM VI Sem Batch 2020-23 of the KCCILHE, Greater Noida
hereby declare that the Project Report titled IMPACT OF GST ON FAST MOVING
CONSUMER GOODS is an original work and the same has not been submitted to any other
University or Institution for the award of any degree, diploma/certificate or published any time
before.

Date: (Signature of the Student)

Name:

This is to certify that as per best of my belief, the Project Report titled “IMPACT OF GST ON
FAST MOVING CONSUMER GOODS” is a bonafide research work carried out by
XXXXXXXXXXX, student of B.COM VI Sem, KCCILHE, Greater Noida, in partial fulfilment
of the requirements for the award of Bachelor of Commerce (hons).

Date: (Signature of the Faculty Guide)

Name: Dr. Nitu Maurya

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 ACKNOWLEDGEMENT

In the present world of competition there is a race of existence in which those are having a
will to come forward, succeed. Project report is like a bridge between theoretical and practical
working. With this willingness, I have had the privilege to do project report. I would like to
thanks my Coordinator Ms. Nitu Maurya and our Director Dr. Bhawana Aggarwal for their
continuous efforts in molding us to good entrepreneurs and also good humans.

I would also like to thanks other without them this report is impossible to make and those are
my respondent or public who give me some valuable information about themselves and what
they think off, so that I can create my report on this topic. Along with that their positive
attitude towards my report are really helpful and appreciable, I will thank for that too also.

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 TABLE OF CONTENTS

S No Topic Page No

Chapter Plan

1 Chapter I: Introduction

1.1 Objective of the study

1.2 Review of Literature

1.3 Research Methodology

1.4 Limitations of the Study

2 Chapter II: Analysis and Interpretation of Data

3 Chapter III: Conclusions & Recommendations

4 Bibliography

5 -Questionnaire

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 CHAPTER - 1

INTRODUCTION

Introduction
5
What is GST?
‘GST’ or ‘Goods and Services Tax’ is an indirect tax which has replaced many indirect taxes
in India such as excise duty, VAT, services tax, etc. In other words, GST is levied on the
supply of both goods as well as services. The Goods and Services Tax Act was passed in the
Parliament on 29th march, 2017 and came into effect on 1st July 2017.

History of GST in India:

The concept of Goods and Services Tax was introduced very first in the year 2000, by the
Prime Minister Late Atal Bihari Vajpayee and he set up a committee to design a GST model
for the country. In the year 2004, Congress-led UPA government won the Lok Sabha election
and form the government and the new finance minister P. Chidambaram continued the work
on same. The UPA bring the GST bill in the Lok Sabha in August 2013, but in October 2013
the Gujarat Chief minister Narendra Modi with other parties who were in opposition raised
objections that lead to the bill’s indefinite postponement.

In 2014 Lok Sabha elections, the BJP-led NDA government was elected in power. Seven
months after the formation of the then, the new Finance Minister Arun Jaitley introduced the
GST Bill in the Lok Sabha, where the BJP had a majority. In February 2015, Jaitley set
another deadline of 1 April 2017 to implement GST. A 21-member selected committee was
formed to look into the proposed GST laws. After GST Council approved the Central Goods
and Services Tax Bill 2017 (The CGST Bill), the Integrated Goods and Services Tax Bill
2017 (The IGST Bill), the Union Territory Goods and Services Tax Bill 2017 (The UTGST
Bill), the Goods and Services Tax (Compensation to the States) Bill 2017 (The Compensation
Bill), these Bills were passed by the Lok Sabha on 29 March 2017. The Rajya Sabha passed
these Bills on 6 April 2017 and were then enacted as Acts on 12 April 2017. Thereafter, State
Legislatures of different States have passed respective State Goods and Services Tax Bills.
After the enactment of various GST laws, Goods and Services Tax was launched all over
India with effect from 1 July 2017. The Jammu and Kashmir state legislature passed its GST
act on 7 July 2017, thereby ensuring that the entire nation is brought under a unified indirect
taxation system. There was to be no GST on the sale and purchase of securities.

6
Components of GST

 CGST: It is the tax collected by the Central Government on an intra-state sale (e.g., a
transaction happening within Maharashtra).
 SGST: It is the tax collected by the state government on an intra-state sale (e.g., a
transaction happening within Maharashtra)
 IGST: It is a tax collected by the Central Government for an inter-state sale (e.g.,
Maharashtra to Tamil Nadu)

Objectives of GST

 To achieve the ideology of ‘one nation, one tax’.

 To eliminate the cascading effect of taxes.
 To increase the taxpayer base.
 To promote competitive pricing and increase consumption.

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Benefits of GST on the Indian economy

 Removal of bundled indirect taxes such as VAT, CST, Service tax, CAD, SAD, and
Excise.
 Less tax compliance and a simplified tax policy compared to current tax structure.
 Removal of cascading effect of taxes i.e. removes tax on tax.
 Reduction of manufacturing costs due to lower burden of taxes on the
manufacturing sector. Hence prices of consumer goods will be likely to come down.
 Lower the burden on the common man i.e., public will have to shed less money to
buy the same products that were costly earlier.
 Increased demand and consumption of goods.
 Increased demand will lead to increase supply. Hence, this will ultimately lead to
rise in the production of goods.
 Control of black money circulation as the system normally followed by traders and
shopkeepers will be put to a mandatory check.
 Boost to the Indian economy in the long run.

Major segments in the FMCG sector are:

 30% household sector (Fabric wash, household cleaners).
 30% Personal care (Oral care, Haircare, Skincare, cosmetics, Hygiene and paper
products).
 50% Food and Beverages (Health beverages, Bakery, snacks, chocolates, ice cream,
processed fruits and vegetable and dairy products etc).
 GST is going to have a significant impact on the FMCG sector. Simpler tax regime
under. GST is going to benefit the FMCG company. It is also going to impact on
the pricing strategies, sales, cost, tax compliances of FMCG companies.

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Impact of GST on FMCG
• Reduction in logistics costs: The FMCG sector will also benefit from GST by saving a

considerable amount of expenses on logistics. Distribution costs for the FMCG sector

currently amount to 2-7 percent of the total cost, but are expected to drop to 1.5

percent after implementation of GST software. Due to the smoother supply chain

management in regards to paying tax, claiming input credit, and removing CST under the

GST regime, there will be a cost reduction in terms of transportation and storage of

goods. The reduction in taxes and distribution costs should enable companies to lower

prices on consumer goods.

• Increase in effective tax rates: Aerated beverages have been placed in the highest tax

slab of 28 percent and will now attract an additional tax of 12 percent. Beverage

companies have said the effective tax rate of 40 percent on sweetened aerated water

and flavoured water under GST is against the stated policy of maintaining parity with the

existing weighted average tax, which is significantly below 40 percent.

Need for study

Fast Moving Consumer Goods (FMCG) goods are popularly named as consumer-packaged
goods. Items in this category include all consumables (other than groceries/pulses) people
buy at regular intervals. FMCG is also one of the fastest growing sectors among all the
sectors in the Indian economy. FMCG segment is the fourth largest in the Indian economy.
For most segments within the FMCG spare, GST brings good tidings on the back of lower tax
incidence when compared to the total tax paid pre – GST.
In this sector GST would have an impact on the pricing, working capital, contracts with
vendors and customers etc. The sale of retailers, wholesalers and the monthly budget of
common people regarding fast moving consumer goods (FMCG) should have an impact of
GST.

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Moreover, the concept of GST awareness among common man is an important matter to be
analysed. FMCG goods have faced an increased rate of tax after GST certain big players like
Nestle, HUL and P&G have been impacted by GST.

Importance of this study

In an ocean of volatile industries, the FMCG industry represents an island of stability during
times of economic uncertainty. Among the various industries that characterize the modern
global economy, the Fast-Moving Consumer Goods Industry is amongst the most resilient to
economic shocks. Unlike other industries, the FMCG sector is not prone to mass layoffs or
substantial dips in profit when the economy slows down. This is due to the nature of the
goods themselves. For a developing country like India a sector like FMCG which does not
get affected by economic stability is to be focused on. So, it is important to analyse the
impact of a big tax reform in the country with respect to the 4th largest sector of the Indian

economy.

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 Objectives of the study

 To understand the concept of GST.

 To obtain a comprehensive overview of consumer’s, wholesaler’s and retailer’s
awareness and perceptions of GST.
 To find out the impact of GST on sales of retailers and wholesalers.
 To analyse the impact of changes in the tax rates of fast-moving consumer goods on
consumers. Is it positive or negative.

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 Literature Review

Empowered committee of finance ministers (2009), introduced their first discussion paper on
GST in India which analyses the structure and loopholes if any in GST. Vasanthagopal
(2011) in the article GST in India, A big leap in the indirect taxation system discussed the
impact of GST on various sectors of the economy. The article further stated that GST is a big
leap and a new impetus to India's economic change. The constitution 115 amendment bill,
2011. Bird (2012) summarizes in the article the GST/HST- creating an integrated sales tax in
a federal country the impact of GST will be on Canada. Garg (2014) in the article named
basic concepts and features of goods and services tax in India analyses the impact and GST
on Indian tax scenario and concluded that it will strengthen out free market economy.

Under the study, Kaur. M, et.al (2016), mainly focuses on what are the impacts of GST after
its implementation, the difference between the present indirect taxes and GST and also
benefits and challenges of GST after its implementation. Research being a qualitative
research analysis on how various goods and services are being taxed under GST. Researches
use the consumer price index which is a statistical estimate constructed using the prices of
items collected periodically. With the help of CPI researcher analysis, the significant impact
of GST on various items which comes unto 20-25%. Researchers conclude stating that GST
would reduce the tax burden and also play inactive role in the growth and development of our
country.

AurobindaPanda (KNT school of Law), Atul Patel (KIIT school of law), “THE IMPACT OF
GST (goods and service tax) ON THE INDIAN TAX SCENE (2010) AT SSRN”The
research paper
analyses how GST would impact on Indian tax scenario. The authors have given a brief
history of Indian taxation and its structure. Background of GST outside India as well as in
India is also discussed. Authors concluded that GST would be beneficial for the industry and
the consumers. It would lead to an increase in revenue for the government.

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In the study Monika Sehrawat, et.al (December 2015) focuses on GST IN INDIA, A KEY
TAX
REFORM for international journal of research- This research presents an overview of GST
concept. It explains the features and its live line of implementation in India. The paper also
highlights the advantages and disadvantages of GST in India. The author concludes that GST
fulfils the requirement of the simplified, user-friendly and transparent tax system. The author
also states that with the coming of GST, it will lead to higher more employment opportunities
and flourish GDP by 1-15 %.

Dr Mohan Kumar, et.al (December 2017) talks about GST AND ITS PROBABLE IMPACT
ON THE FMCG INDUSTRY IN INDIA , for the international journal of research in finance
and marketing. This paper analyzes the impact of the FMCG industry. The fast-moving
consumer goods (FMCG) sector of India compromises more than 50% of the food 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, its proposed that the revenue neutral rate
would be in the range of 16 - 19%.

R Hiremani Naik et.al (December 2017) discuss ON PERSPECTIVE IMPACT OF GST ON

FMCG SECTOR IN INDIA” , for international journal of research in Business studies.
The fast-moving consumer goods (FMCG) segments arethe 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.

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 Research Methodology

Research is a logical and systematic search for new and useful information on a particular
topic. Research methodology is a systematic way to solve a problem. It is a science of
studying how research is to be carried out. Essentially, the procedures by which researchers
go about their work of describing, explaining and predicting phenomenon are called research
methodology.
Process of research methodology -
• Research design
• Population
• Instruments
• Questionnaire design
• Data collection
• Data analysis

Research design
The design in this research is a descriptive design to examine the impact of GST on
Indian economy as a whole and specifically on FMCG sector. Descriptive research aims
To accurately and systematically describe a population, situation or phenomenon. A
descriptive research design can be using a wide variety of quantitative and qualitative
methods to investigate one or more variables. The data was collected from various retailers
and wholesalers of different regions in Delhi by making a structured questionnaire. The data
was filled by the respondents through offline google form. The data also includes various
tables to aid the reader in understanding the data distribution and hence provide a better and
simplified extraction on impact of GST on Indian economy and FMCG sector.

Scope of the project

The project covers possible impact of GST on FMCG sector. It also explains the perspective
positives and negatives of GST implementation to FMCG sector. The project highlights
various problems faced by retailers and wholesalers while filing GST. They are also asked
about the effect of GST on the prices of raw materials and products. A questionnaire of 15

14
questions was used to gauge the awareness of GST amongst retailers and wholesalers of
FMCG.
Type of research-
The project is descriptive in nature as it describes the various attributes of GST and its impact
on Indian economy in general and on FMCG specifically.
Method of data collection-
Primary data collected through sample survey from retailers and wholesalers of FMCG
shops. So, for this purpose I have most popular tool of primary data collection through direct
communication.
Sample-
While deciding about the sample of research, it is required from the research's point to pay
attention to these under mentioned points
1. Sample units-a decision has to be taken concerning a sampling unit before selecting a
sample, sampling unit may be a geographical area, so in this research sampling unit is
New Delhi
2. Source of data- data required for the study was collected through primary sources
(market survey)
3. Sampling size- This refers to the number of items to be selected from the universe to
constitute a sample. This is a major problem for the researcher. The size of sample
should neither be excessively large or small, it should be optimum. This size of
population must be kept in view for this also limits the sample size. Sample size in this
project. Sample size in this project is 50.

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 LIMITATION OF THE STUDY

 The sample may not adequately represent total market and it is very less
as compared to total market size.
 Only wholesaler and retailer can respond to this questionnaire

 The questionnaire mostly contains multi choice question therefore many

respondents did not give a proper thought before giving the answers and
some even ticked the answers which were not applicable therefore all this
increased the biasness.

 The study of such a short course of time is not free from limitation. So
time limitation is the main point of limitation.

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 CHAPTER 2

DATA ANALYSIS AND INTERPRETATION

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Q1. AGE OF THE RESPONDENTS.

INTERPETITION:
Most of the respondents are belonging to the age group 21-30 years, and after them the age
group of 31-40 years means the fully matured people are the second according to the data
collected.

S. no. Age group No. of responses Percentage (%)

1 16-20 7 14

2 21-30 19 38

3 31-40 12 24

4 41-50 8 16

5 Above 50 4 8

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Q3 GENDER OF THE RESPONDENTS

INTERPETITION:

According to the data collected most of the respondents are male because in our society’s
point of view males are the earners but gradually women are also now started working with
men.

S. no. Gender No. of responses Percentage (%)

1 Male 36 72

2 Female 12 24

3 Preferred not to say 2 4

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Q3 Retailer or wholesaler

INTERPETITION:

Most of the respondents are retailers as compaired to wholesaler according to the data
collected.

S. no. Type of business No. of responses Percentage(%)

1 Retailer 26 52

2 Wholesaler 24 48

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Q4 Annual Income

INTERPETITION:

Most of the respondents are earning 3-5 lakhs per annum which is a very good,

And least number of respondents who are actually earning good amount of
money as per the data is collected.

S. no. Annual income No. of responses Percentage (%)

1 < 1 lakh 7 14
2 1 lakh-3 lakhs 9 18
3 3 lakhs-5 lakhs 17 34
4 5 lakhs-10 lakhs 12 24
5 > 10 lakhs 5 10

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Q5 Is GST beneficial for your business?

INTERPETITION:

As per the collected data half of the respondents are agreeing that GST is beneficial for there
business and half are not agreeing while some are not facing any major problem.

S. no. Response No. of responses Percentage (%)

1 Yes 20 40

2 No 20 40

3 At some extent 10 20

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Q6 Are you registered under GST?

INTERPETITION:

Most of the respondents are registered under GST while on the other some are still not
registered under GST

S. no. Response No. of responses Percentage (%)

1 Yes 44 88

2 No 6 12

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Q7 Do you know the benefits of GST?

INTERPETITION:

According to the data more than half of the respondents don’t know the benefits of being
registered under GST while there are many people know the benefits.

S. no. Response No. of responses Percentage (%)

1 Yes 22 44

2 No 28 56

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Q8 Has GST affected your business?

INTERPETITION:

Most of the respondents are agreeing that GST has affected there business according to them
they earn more profit before implementation of GST.

S. no. Responses No. of responses Percentage (%)

1 Yes 28 56

2 No 22 44

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Q9 When do you file your GST return?

INTERPETITION:

As per the collected data most of the people prefer to file there GST returns on the quarterly
basis and rest are filing on either monthly or annual basis.

Preference of
S. no. No. of responses Percentage (%)
filing GST return

1 Monthly 18 36

2 Quarterly 22 44

3 Annually 10 20

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Q10 Do you face any problem in filing GST returns?

INTERPETITION:

Most of the respondents are facing problems while filing there GST return, either they have
lack of knowledge or may be they are too busy.

S. no. Response No. of responses Percentage (%)

1 Yes 23 46

2 No 27 54

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Q11 How you file your GST returns?

INTERPETITION:

Many of the respondents are filing there GST returns by taking help of those who are expert
in filing like CAs to hinder errors in filing, while some are able to file on there own.

S. no. Response No. of responses Percentage (%)

1 On your own 17 34

2 With help of expert 33 66

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Q12 Does inflation increases because of GST ?

INTERPETITION:

Most of the respondents are in favor of that the GST is the reason for sudden increase in
inflation in the country.

S. no. Opinion No. of responses Percentage (%)

1 Strongly agree 6 12

2 Agree 21 42

3 Neutral 7 14

4 Disagree 14 28

5 Strongly disagree 2 4

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Q13 Is GST a way for the government to earn more taxes ?

INTERPETITION:

Most of the respondents are thinking that GST is implemented majorly for the purpose
earning more taxes, which is wrong it is implemented for unifying the tax system in India.

S. no. Opinion No. of responses Percentage (%)

1 Strongly agree 9 18
2 Agree 21 42
3 Neutral 16 32
4 Disagree 4 8
5 Strongly disagree 0 0
Q14 Is GST a good step by the government ?

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INTERPETITION:

As per the collected data the respondents give very mixed opinion that the government has
taken a good step by introducing GST in India for changing the old tax system by introducing
it.

S. no. Opinion No. of responses Percentage (%)

1 Strongly agree 10 20
2 Agree 12 24
3 Neutral 7 14
4 Disagree 13 26
5 Strongly disagree 8 16

Q15 Is GST helping in boosting economy?

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INTERPETITION:

As per the data nearly half of the respondents are agreeing that after introducing GST at the
beginning there is a down fall in economy but later on the economy grows gradually.

S. no. Opinion No. of responses Percentage (%)

1 Strongly agree 8 16
2 Agree 17 34
3 Neutral 7 14
4 Disagree 10 20
5 Strongly disagree 8 16

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CHAPTER 3

CONCLUSION

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 CONCLUSION OF THE STUDY
GST will bring in transparent and corruption-free tax administration, removing the current
shortcomings in indirect tax structure. GST is business-friendly as well as consumer-friendly.
GST in India is poised to drastically improve the positions of each of these stakeholders. We
need a change in the taxation system which is better than earlier taxation. This need for
change leads us to ‘need for GST’.

GST will allow India to better negotiate its terms in the international trade forums aimed at
increasing the taxpayer base by bringing SMEs and the unorganized sector under its
compliance. This will make the Indian market more stable than before and Indian companies
can compete with foreign companies.

GST is a recent policy introduced. GST aims at simpler tax regime and transparency in all
transaction. FMCG sector which is an important player in the market sector has been
impacted by GST to some extent. This research concludes that GST has an impact on various
aspects of FMCG companies. Since it has only been three years from when the GST law
came into force, the extent or degree of such impact cannot be completely fathomed. It
would require more time evaluate whether GST would prove to be beneficial to FMCG
retailers and wholesalers.

After questioning 50 retailers and wholesalers about GST we can conclude that their
businesses have been affected due to GST.

According to our analysis we have concluded that retailers and wholesalers who file GST on
their own face problems while filing GST. It is a new way of filing tax so traditional business
have issues while filing GST.

The increase in prices of raw material of FMCG has effect on the price of goods therefore
the price of raw material has a direct relation on the sales and the hiked price ultimately is
paid by the consumers We also found out that if the government provides relief on FMCG
the purchasing power of the Consumer will be affected as the prices will fall down the

34
purchasing power will go up. The purchasing power also has relationship with the credit
period. GST is followed by many top economies in the world and hopefully it will bear fruit
to the Indian economy as well.

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 BIBLIOGRAPHY

WEBSITES

1. http://www.gstcouncil.gov.in
2. https://cleartax.in/s/gst-consumer-fmcg
3. https://sinewave.co.in/blog/how-gst-has-impacted-the-fmcg.aspx
4. https://www.ibef.org/industry/fmcg.aspx
5. https://kb.icai.org/pdfs/PDFFile5b432d754ab853.80651823.pdf

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 QUESTIONNAIRE

1. Name:-_______________

2. Gender
a. Male
b. Female
c. Prefer not to say

3. Age group
a. 16-20
b. 21-30
c. 31-40
d. 41-50
e. Above 50

4. Are you a retailer or wholesaler?

a. Retailer
b. Wholesaler

5. Annual income
a. Less than 1 lakh
b. 1 lakh – 3 lakhs
c. 3 lakhs – 5lakhs
d. 5 lakhs – 10 lakhs
e. Mare than 10 lakhs

6. Is GST beneficial for your business?

37
 a. Yes
b. No
c. At some extent

7. Are you registered under GST?

a. Yes
b. No

8. Do you know the benefits of GST?

a. Yes
b. No

9. Which type of filing do you prefer?

a. Monthly
b. Quarterly
c. Annually

10. Do you face any problem in filing GST?

a. Yes
b. No

11. How you file your GST returns?

a. On your own
b. With the help of expert

12. Does inflation increases because of GST?

38
 a. Strongly agree
b. Agree
c. Neutral
d. Disagree
e. Strongly disagree

13. Is GST a way for the government to ear more taxes?

a. Strongly agree
b. Agree
c. Neutral
d. Disagree
e. Strongly disagree

14. Is GST a good step by the government?

a. Strongly agree
b. Agree
c. Neutral
d. Disagree
e. Strongly disagree

15. Is GST helping in boosting the economy?

a. Strongly agree
b. Agree
c. Neutral
d. Disagree
e. Strongly disagree

39