GST rate cut: CBEC chief asks FMCG companies for immediate revision in MRP

CBEC Chairperson Vanaja Sarna has written to FMCG companies asking them to immediately revise MRP on all products in line with the latest reduction in GST rates.

The Goods and Services Tax (GST) rate was reduced on 178 items including detergents, shampoos and beauty products, from 28 per cent to 18 per cent from November 15.

In her letter to all the major Fast-Moving Consumer Goods (FMCG) companies, Sarna pointed out the need to immediately revise the maximum retail price (MRP) on all the products for which the tax reductions have been announced by the GST Council, according a statement by the finance ministry.

"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," it said.

GST rates on a number of items have also been reduced from 18 per cent to 12 per cent and from 12 per cent to 5 per cent.

"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. The reduction in GST rates is also expected to encourage domestic demand and investment," the ministry said.

Items on which tax rate has been cut from 28 per cent to 18 per cent 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 power, razors and blades, cutlery, storage water heater, batteries, goggles, wrist watches and mattress.

Tax rate on condensed mil, refined sugar, pasta curry paste, diabetic food, medical grade oxygen, printing ink, hand bags, hats, spectacles frame and bamboo/cane furniture has been cut from 18 per cent to 12 per cent.

The top tax rate of 28 per cent is now restricted to 50 items, including white goods, cement, paints, luxury and demerit goods like pan masala, aerated water and beverages, cigars and cigarettes, tobacco products.

Last week, Finance Secretary Hasmukh Adhia had 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.

When asked what would happen if any retailer does not pass on the benefit despite the corporate reducing the rate, Adhia said the responsibility would rest with the FMCG firm.

"I again want to appeal to FMCG companies that if they want to be safe from anti-profiteering action then they have to ensure that their whole retail chain is informed and immediately pass on the effect of reduction of tax rate from 28 per cent to 18 per cent to consumers," Adhia, who is also the Revenue Secretary, had said.