FMCG firms found most guilty of profiteering post GST

By: |
December 17, 2019 1:21 PM

Even after the rollout of GST, many companies are pocketing the benefits of lesser tax themselves and fast-moving consumer goods firms were found to be overcharging customers the most.

Following FMCG companies are restaurants, and entertainment and media firms, according to official data. (Image: Bloomberg)

Even after the rollout of GST, many companies are pocketing the benefits of lesser tax themselves and fast-moving consumer goods firms were found to be overcharging customers the most. Following FMCG companies are restaurants, and entertainment and media firms, according to official data, IANS reported. About 40 consumer complaints were registered against various FMCG companies as many of them were found to be not complying with the latest GST regime and arbitrarily taxing customers. Nestle, the maker of Maggi noodles and coffee brand Nescafe, was also recently asked to pay Rs 90 crore by anti-profiteering watchdog NAA. Other major FMCG companies like Hindustan Unilever Ltd (HUL), Procter & Gamble India (P&G) were also found to have profiteered from the lower tax regime, IANS reported.

The GST council meetings have cut rates across various categories so that customers have to pay lesser on the total amount. However, the same did not materialise in several cases as companies withheld passing on the benefits. In many cases, the prices were not lowered in proportion to the rate reduction as companies indulged in profiteering. Complaints on the same were filed on National Anti-profiteering Authority (NAA).

In Nestle’s case, the anti-profiteering regulator had asked the company to deposit Rs 73.15 crore with the Consumer Welfare Fund as the company had deposited the remaining amount voluntarily last year. 

Responding on NAA’s order, Nestle said: “Nestle India as a responsible corporate citizen has passed on the benefits of GST to consumers and will consider appropriate actions post studying the order by the National Anti-Profiteering Authority (NAA)”. The Maggi noodle maker had also said that it is passing on the benefits to customers by two ways — MRP reduction and increasing product quantity or grammage. “On SKUs where it was not practicable to pass on the benefits, say for example Nescafe single-serve packs for Rs 2 or Maggi Noodles Rs 5 packs, the benefit has been passed on other pack sizes within the same product category,” the Swedish FMCG company added. 

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