K. Giri, Director General, Empower India said, “It is prudent to defer the introduction of IMS as it could impact the retail ecosystem during the festive season when they conclude 30-35% of their yearly sales. Also, for the retail ecosystem, a new guideline to be followed in middle of a busy sales period is an unwarranted distraction. The lack of a functional supplier dashboard, which would provide visibility on recipient actions, further complicates the implementation.”

Areas of improvement:

• Stakeholders have identified the need for improvements in the IMS, such as the inclusion of GSTR-1 and GSTR-3B filing status for suppliers, as well as the ability to validate data at the invoice level rather than the rate level.
• The treatment of credit notes when rejected by customers is a major concern as it would add up to the tax liability of the supplier.
• Consultation with small businesses and with the last retailer is critical for success of such an initiative which is all pervasive.
• Allowing credit notes to be kept pending, providing sufficient time for alignment before automatic addition of tax liability, and enabling suppliers to issue debit notes to offset rejected credit notes are some of the recommendations from taxpayers.
• The current proposal lacks clear mechanism for suppliers to dispute any incorrect or mischievous rejection of credit notes by their customers.

 As the government continues to refine the IMS, it is crucial that policymakers engage closely with businesses to address these pressing concerns and ensure a smooth transition to the new compliance regime. The companies are already handling a major GST change by way of Input Service distribution becoming mandatory from the next financial year, and this unannounced change further complicates the compliance process. A collaborative approach between the government and the business community is essential to address the complexities of the new Invoice Management System. Business should be allowed at least 12 months to prepare for the implementation of IMS.

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The disagreement stems from a recent government clarification categorizing snacks as either extruded or non-extruded. Extrusion is a food processing technique involving the pushing of ingredients through a machine to achieve a desired shape, commonly used in the production of many ready-to-eat snacks. Examples of extruded snacks include finger snacks like PepsiCo’s Kurkure, Prataap Snacks’ Yellow Diamond puffs and rings, and ITC’s Bingo Mad Angles. On the other hand, biscuits and potato chips are classified as non-extruded snacks. Industry experts estimate that extruded snacks contribute 25-30% to the total salty snacks market worth Rs 47,000 crore, with the remaining share coming from non-extruded snacks.

While food companies have been paying a 12% GST on snacks overall, the GST Intelligence body is now insisting on an 18% GST for extruded snacks and maintaining the 12% rate for non-extruded snacks, according to reports.

Sources within the food industry have revealed that the aforementioned companies, along with a few others, have received notices totaling approximately Rs 1,000 crore in terms of additional GST to be paid by them. However, there has been no official confirmation of this report as of yet.

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