Gear up for supply chain disruption after GST implementation

Source :LiveMint 9 May 2017

Concerns over potential losses arising from mismatch between tax payout and tax refund after GST implementation has led to traders reducing stock-in-trade In the run-up to the implementation of the Goods and Service Tax (GST), distributors and wholesalers in various sectors could be tempted to de-stock, in a bid to avoid losses on the tax credit front. Since product-wise GST rates will be finalized at the end of June, concerns over potential losses arising from mismatch between tax payout and tax refund once GST is in place, has led to traders reducing stock-in-trade.

Media reports state that de-stocking has already begun in the pharmaceutical sector, where some stockists have started maintaining low stock levels and some others have begun returning a big chunk of their stocks to companies.

Secondly, the GST Council has guided for lower tax on items of mass consumption such as spices, tea and mustard oil. This means certain items of this category may attract lower taxes in the GST regime than currently levied on them, thus presenting a case for holding lower stock levels of such goods

 

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