The government once again reminded that the benefit of reduction in the GST rate has to be passed on by the suppliers to the consumers.
The government once again reminded that the benefit of reduction in the GST rate has to be passed to the consumers by way of commensurate reduction in prices. The GST Council in its 23rd Meeting held on November 10 in Guwahati, had recommended the reduction of the GST rate from 28% to 18% or lower tax slabs on goods falling under 178 headings.
The Chairperson of Central Board of Excise & Customs (CBEC), Vanaja N Sarna has written to all the major Fast-Moving Consumer Goods (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. “The Government expects that the industry should immediately respond to the earlier appeal made by the Finance Minister on this issue,” the Finance Ministry said in a statement.
While the government makes repeated appeals, 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.
Last week Finance Secretary Hasmukh Adhia also said that FMCG firms and big corporates will have 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.
Currently, the GST regime slots items under four primary tax rate slabs — low rate of 5%, standard rates of 12% and 18%, and high rate of 28%. Other than this, gold and jewellery are taxed at a concessional GST rate of 3%, while rough diamonds are having a 0.25% levy. The items of daily use have been kept tax-free, ie, either at zero tax rate or completely out of the ambit of tax under GST. Apart from this, an additional cess varying for item-to-item is levied — as in case of cigarettes and luxury cars — on sin and luxury items.