FMCG Majors Gear Up With Trade Circulars Ahead Of GST Relief on E
The leading consumer goods manufacturers in India such as Hindustan Unilever Ltd, P&G and L’Oréal have dispatched communication to the general trade partners about the reduction of goods and services tax (GST) on household products.
Communicating both offers and change of distribution networks by fast-moving consumer goods (FMCG) majors, as a result of the rate cut, which goes into effect 22 September after the 56th meeting of the GST Council, has made the focus on both the price changes and also announced the progression to the new rates.
L’Oréal India also told its trade partners that, as of 22 September, the GST of shampoos and face powders will be reduced to five per cent.
A message sent by the manufacturer of Maybelline and L'Oréal brands to its trade partners last week stated that invoicing until 21 September would remain at the prevailing GST rates.
From 22 September, invoices for these specific items will reflect the newly revised, low GST rates. The company is working towards revised maximum retail prices (MRPs), it said. It assured retail partners that products purchased prior to the change and sold after the prices are revised will be eligible for full input tax credit.
It added that other product categories, such as skincare, perfumes, hair colour, and serums, will continue under the existing 18 percent GST slab.
The move comes as India is set to roll out revised GST rates, which will lower the prices of household essentials.
Companies are also ensuring transition to new prices by liquidating inventory of existing stock.
Hindustan Unilever, on the other hand, has rolled out a 'Retailer Bonanza' from 11 to 20 September with upfront trade offers across categories. These include 4% on all soaps (except Moti), seven percent on Moti soaps, 20 percent on small & medium shampoo bottles, 10 percent on large bottles, and 20 percent on XL & XXL packs. Indulekha oil carries a seven percent offer; Clinic plus & Clear oils 11 percent, while talc and face powders are being offered at 11 percent. In oral care, Pepsodent and Close Up packs carry eight percent, while foods, Horlicks and Boost are at five percent and beverages like coffee and Red Label premix at seven percent, it said in a communication.
Procter & Gamble has announced a “GST Special Offer” ahead of the official rate change. Between 10 and 21 September, shopkeepers will get an extra 10 percent top-up on products moving from 18 percent to five percent GST (Pantene, Head & Shoulders, Gillette Personal Care, Old Spice, Oral-B) and an extra five percent top-up on items moving from 12percent to five percent GST (Pampers, Vicks).
According to a September communication from the FMCG Company, products like Tide, Ariel, Whisper, Olay, and Gillette razors remain under the existing slab, and current trade schemes continue.
The government's decision to revamp GST will lead to sharp tax cuts on a range of daily-use items.
Hair oil, shampoo, toothpaste, toilet soap bars, toothbrushes and shaving cream will now attract 5 percent GST, from 18 percent earlier. Similarly, GST on butter, ghee, cheese, dairy spreads, pre-packaged namkeens, bhujia and mixtures will drop to five percent from 12 percent.
Dhairyashil Patil, national president of the All India Consumer Products Distributors Federation (AICPDF), said the move is directed at companies liquidating existing stock in the market. “We have to ensure these benefits move to end consumers,” he said.
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Meanwhile, Mankind Pharma, which sells brands across consumer products and over-the-counter, said once the revised GST rate is notified, any inventory purchased by retailers at a 12 percent GST rate may need to be sold at the reduced rate of five percent.
“In this regard, we wish to clarify that the GST credit you’ve earned on inventory bought at the earlier 12 percent rate is still fully available to you. Even though the selling rate may change to 5 percent, your right to claim the input credit remains unchanged. There may be a slight delay before the differential credit is fully utilized, but it will remain available for adjustment as usual. Therefore, there will be no financial loss or implication. We encourage you to continue your regular purchasing routines and keep inventory levels stable," the company added.
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Himalaya Wellness Co. has informed its trade partners that several of its consumer products will see a reduction in GST rates from 22 September. Key items moving from higher slabs to 5 percent GST include baby diaper rash cream, Party Smart, and Prickly Heat Baby Powder (12 percent → 5 percent), as well as baby powder, baby hair oil, baby shampoo, hair oil, shampoos, toothpaste, baby soap, and bar soap . Additionally, baby diapers will move to 5 percent from 12 percent GST. Other Himalaya products, such as face wash, lotions, serums, lip balm, massage oils, wipes, and hand wash, will continue under existing GST slabs with no change.
“However, the GST credit you have taken on your inventory bought at the earlier rates is still fully available,” it said in its communication.The company encouraged traders to maintain normal procurement, it said.
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With the GST rate cut on essentials like shampoos and face powders becoming effective from 22 September, companies are urging retailers to stock up early and pass on the benefits to consumers, aiming for higher offtake in the coming festival season.