After tough talks from the Finance Minister on passing the benefits of GST rate cuts to consumers, Fast-Moving Consumer Goods (FMCG) companies have started complying with the order and have announced cutting prices on consumer goods. Dabur on Tuesday announced a reduction in prices on existing stocks of shampoo, skin-care and home care products between 8-10%, media reports said. “The company is passing on the benefits of existing stocks by providing a primary discount of 9% to its trade partners,” the company said.
Meanwhile, P&G came up with offers on available stocks to extend the GST benefit. FMCG majors such as Hindustan Unilever (HUL) and ITC have said they are in the process of reducing prices of commonly used items to pass on the benefits to consumers. “HUL remains committed to passing on the benefits of GST reduction to the consumers. We are reviewing all our networks so that we can commence production of products with lower prices as soon as possible,” an HUL spokesperson told PTI.
In many cases, the production with lower prices will commence this week itself and price changes will be communicated in due course, he added. While putting revised prices on the products would take some time, the companies have asked their channel partners to reduce prices in line with the steep reduction in the GST rates.
Just yesterday, the Chairperson of Central Board of Excise & Customs (CBEC), Vanaja N Sarna wrote to all the major FMCG companies pointing out the need to immediately revise the MRP on all the products in which the reduction of GST has been announced by the Council. Last week Finance Secretary Hasmukh Adhia passed the onus to FMCG firms and big corporates to ensure that retailers pass on the benefit of GST rate cut to consumers and sell their products only after lowering the MRP.
The GST Council had lowered the tax rate on AC and non-AC restaurants to 5% from 18% and 12% respectively while abolishing the Input Tax Credit (ITC) as they were not passing the benefits to their customers.