NEW DELHI: Top consumer products firms including ITC, Dabur, Nestle and GlaxoSmithKline Consumer have written to distributors, stockists and retailers to pass on the benefit of lower goods and services tax to consumers immediately, irrespective of maximum retail price (MRP) printed on product packs. Some retail channels continue to sell products at MRP, company insiders told ET on Friday, even as the government is moving swiftly to implement anti-profiteering provisions.
“In accordance with the GST laws, we have communicated to all our business and trade associates, directing them to start charging the revised lower GST rates, wherever applicable, on all existing inventory, and pass on the GST benefit to the end consumer,” said Lalit Malik, chief financial officer at Dabur India. Dabur has benefitted from GST reductions in shampoo and cosmetics.
Meanwhile, consumer affairs minister Ram Vilas Paswan said in a statement that companies have been allowed to “affix an additional sticker or stamping or online printing for declaring the reduced MRP on the pre-packaged commodity” in view of the recent revision in GST rates. The additional sticker has to be pasted along with the earlier labelling/sticker of MRP, if any. The provision of declaring the new reduced prices will be allowed till December this year, he added.
Last Friday, the GST Council dropped tax rates on 200 products including chocolates, toothpaste, shampoo, washing powder and shaving creams, to 18% from 28%.
A spokesperson for GSK Consumer Healthcare said the maker of Horlicks and Boost nutrition drinks has told its distributors to pass on the net benefits to consumers with immediate effect. “We are doing our best to ensure fresh stocks with new MRP are on the shelves soon,” the person said.
Marketers said packs with revised prices will take a transition time of about two-four weeks before they reach stores.
Trade channel sources said other big FMCG companies including ITC and Nestle have written to their partners demanding that GST benefits be passed on to consumers with immediate effect. A spokesperson for ITC said the firm has modified the price of its relevant products keeping in mind the applicable rates under the recent GST notification. ITC has a diversified portfolio of packaged products including shampoo, deodorants and chocolates.
“Invoices and billing will be under the anti-profiteering authority, and retailers will have to pass on benefits of lower prices to consumers,” a top official of a large consumer goods firm said. “It’s not possible for us, at the company level, to monitor lakhs of points of sale,” the person said.
The Union cabinet on Thursday approved setting up of National Anti-profiteering Authority (NAA) to ensure that all benefits under the new tax regime are passed on to consumers.
The government is now expected to swiftly move on with filling the key posts to ensure that it takes off from next month.
“This authority will look into if the input tax credits have been passed on or not,” a finance ministry official said. “Consumers can complain to screening committees which have been set up in states,” the person said.
The ‘anti-profiteering’ measures enshrined in the GST law provide an institutional mechanism to ensure that the full benefits of input tax credits and reduced GST rates on supply of goods or services flow to the consumers.
This institutional framework comprises NAA, a standing committee, screening committees in every state, and directorate general of safeguards in the Central Board of Excise & Customs (CBEC). Complaints would be examined by the committees and then placed for further action.
Tax experts say businesses need to be prepared for the new regime.
“It is clear that the government has moved from ‘light touch’ to more rigorous implementation of antiprofiteering provisions,” said Pratik Jain, indirect tax leader at PwC.