FMCG and Pharma companies are planning to move to the courts as they are facing retrospective tax burden on availed discounts since 2017. These companies are to approach courts to raise voice against the demands for additional production taxes.
While economic crisis is hitting the sales to slowdown across the country, several consumer durable companies and retailers including FMCG
and Pharma have received notice to pay extra GST on the discounts offered. Currently there is an immense criticism against the move.
As reported by ET, Hindustan Coca-Colas Beverages has also received notice from the indirect tax department.
The structure of GST is pitching mixed impact on businesses. Focusing on FMCG and Pharma is it widely affecting the growth rate slowing it down to a greater extent. The tax is impacting every facet of the business operations making its smooth transition vulnerable at times.
Rohit Jain, Partner, Economic Law Practice said, “Any subsequent discounts will attract the GST unless the company has announced discounts at the time of supply. The tax either could be for supply of services or supply of goods. No input tax credit will be available to the person who grants discount, while considering supply of goods.”
In case of companies offering discounts for stock clearance, the availed discounts will be treated as brand promotions which will encounter taxation of 18%, or no input credit will be availed in that case.