GST Rate Cut: CBEC Urges FMCGs to Immediately Revise MRP of Products to Benefit Consumers
New Delhi, November 21: Days after the GST rate cut came into effect, the Central Board of Excise and Customs (CBEC) has urged Fast-Moving Consumer Goods (FMCG) companies to immediately revise the MRP on products to pass the benefit to consumers. CBEC Chairperson Vanaja Sarna has written to goods companies asking them to immediately revise maximum retail price (MRP) on all products in line with the latest reduction in GST rates. During a recent GST Council Meeting in Guwahati, as many as 178 items of daily use like shampoo, deodorant, washing powder, etc. were shifted from the top tax bracket of 28% to 18%, while a uniform 5% tax was prescribed for all restaurants, both air-conditioned and non-AC. GST rates on a number of items have also been reduced from 18% to 12 percent and from 12% to 5%.
The CBEC Chairperson in her letter to all the major FMCG companies pointed out the need to immediately revise the MRP on all the products for which the tax reductions have been announced by the GST Council. A statement by the finance ministry said, “She has also requested all to give wide publicity to the revised MRP of products. The Government expects that the industry should immediately respond to the earlier appeal made by the Finance Minister on this issue”.
The Ministry said that the benefit of reduction in the GST rate has to be passed on by the suppliers to the consumers by way of commensurate reduction in prices. It stated that the reduction in GST rates is also expected to encourage domestic demand and investment.
As per reports, the daily use items on which tax rate has been slashed from 28% to 18% include chewing gum, chocolates, coffee, custard powder, marble and granite, dental hygiene products, polishes and creams, sanitary ware, leather clothing, artificial fur, wigs, cookers, stoves, after-shave, deodorant, detergent and washing powder, razors and blades, cutlery, storage water heater, batteries, goggles, wrist watches and mattress. Meanwhile, tax rate on condensed milk, refined sugar, pasta curry paste, diabetic food, medical grade oxygen, printing ink, handbags, hats, spectacles frame and bamboo/cane furniture has been cut from 18 percent to 12 percent. It has to be noted that the top tax rate slab of 28% is now restricted to 50 items. This includes white goods, cement, paints, luxury and demerit goods like pan masala, aerated water and beverages, cigars and cigarettes, tobacco products.
The government also approved the creation of the posts of Chairman and Technical Members of the National Anti-profiteering Authority (NAA) under GST soon after the sharp reduction in the GST rates on November 15. The NAA is mandated to ensure that the benefits of the reduction in GST rates on goods or services are passed on to the ultimate consumers by way of a reduction in prices.