Defence forces canteen to get 50% GST refund

The Canteen Stores Department (CSD), the central authority that runs retail stores for India's defence forces, will get a 50% refund of the goods and services tax (GST) paid from the states and the Centre.

The decision has come after CSD suspended orders this month to avoid tax payout disparities before GST launched on July 1.

"CSD will pay full GST and 50% of the total tax would be refunded by state and the Centre," said finance minister Arun Jaitley.

CSD, also known as the Army Canteen, is the largest buyer for several consumer product companies, single-handedly accounting for 5 to 7% of their sales volume.

In a letter dated May 31^st, CSD had asked all depots to suspend its orders.

"In view of the GST implementation, LS (local supply) Orders to be placed for supplies during June 2017 are suspended till further orders," said the letter.

As per analysts and industry experts, destocking is taking place so that compliance on transition stocks can be maintained, and that clarity is needed on the matter.

"While CSD is an important channel for most FMCG companies, the impact can't be gauged as several companies are trying to convince the trade that they will take the hit on their books," Edelweiss Securities senior vice president Abneesh Roy told ET.

(Image source SatyaVijayi)