The All India Consumer Products Distributors Federation (AICPDF), the apex body representing FMCG distributors, has urged the government to issue clear guidelines on the proposed GST reforms to avoid trade disruptions and pricing confusion.
The appeal comes after the Group of Ministers (GoM) approved the Centre’s recommendation for a simplified two-slab GST structure. Under the proposed GST 2.0, the 12 percent and 28 percent slabs will be scrapped, while 5 percent and 18 percent will be retained. A new 40 percent slab is planned for sin goods.
Call for directives on pricing and stock
In a letter to Finance Minister Nirmala Sitharaman, AICPDF warned that sudden rate changes could impact margins on goods already in the distribution pipeline.
“Large volumes of stock are lying with distributors and retailers. Any abrupt rate revision without guidelines could squeeze margins, create disputes, and confuse consumers. We urge clear directives to manufacturers on pricing and stock adjustment,” the federation said.
If the reforms are approved in the upcoming GST Council meeting, food and beverage items currently taxed at 12 percent—such as edible oils, butter, ghee, instant noodles, juices, rice, and dry fruits—could shift to the 5 percent bracket, lowering consumer prices. However, experts noted that home and personal care products may see little change, as they largely fall within the existing 5 percent and 18 percent slabs.
ITC transition flagged as key risk
The federation also raised concerns about the transition of input tax credit (ITC) on closing stock. “Without a clear framework, distributors and retailers could face financial strain. Ensuring rightful credit of ITC is essential to avoid burdening trade partners,” AICPDF said.
Impact on sin goods
The body further cautioned that the new 40 percent slab could dent demand for soft drinks, which are heavily consumed at lower price points of Rs 10–20. With soft drinks now clubbed with tobacco and gutkha in the sin goods category, AICPDF warned of potential sales decline.
