Despite GST cut, no change in FMCG prices; firms to blame

Nitin Jain

Tribune News Service

Chandigarh, December 6

A majority of the FMCG (fast-moving consumer goods) firms have increased the base price of their commodities to deny consumers the benefit of a major reduction in the GST (Goods and Services Tax) on such items.

Not only this, the prices of rice and pulses also remained unchanged even after these essential commodities were fully exempted from the GST. These were among the serious lapses found by the UT Administration during a special survey conducted across the city after the GST Council slashed the GST slabs on various commodities at its 23rd meeting held in Guwahati on November 10.

After the GST was brought down from 28 per cent to 18 per cent on the FMCG, companies raised the base price and the MRP (maximum retail price) of such commodities was not slashed following which the consumers were still made to pay the same price without getting the benefit of 10 per cent GST cut on the FMCG, a top UT officer told The Tribune here today.

Taking serious note of the lapses, which had deprived consumers of the the benefit of the GST cut, the UT Excise and Taxation Department and the Food and Civil Supplies Department have been asked to take stern action against the violators.

During the survey, conducted on the directions of Deputy Commissioner Ajit Balaji Joshi, five joint teams swooped down on restaurants, FMCG wholesalers, supermarkets and kiryana dealers to check whether bills were being issued and the correct GST rate was being charged or not to extend the benefit of tax reduction to the consumers.

The survey of restaurants found that an eating joint at Panjab University, Student Centre, Sector 14, was charging 18 per cent GST instead of 5 per cent on food.

The checking of FMCG dealers brought to the fore that the parent companies of the FMCG had increased the base price after the reduction in GST rates from 28 per cent to 18 per cent and the FMCG companies had not slashed MRP of goods following which the tax reduction benefit was being pocketed by the companies and not passed on to the consumers.

The teams also visited registered taxpayers, who were dealing in the supply of rice and pulses and examined the prices of rice and pulses prior to and after the implementation of the GST. “It was noticed that there was no change in the prices of rice and pulses even after these essential commodities were exempted from the GST,” the officer disclosed.

Under the GST regime, essential commodities like wheat, pulses, rice, unbranded atta (wheat flour), suji, maida, besan and salt were exempted from the GST while other essential commodities like sugar, tea, edible oils and spices were taxable at the rate of 5 per cent.

At its 23rd meeting, the GST Council had reduced the rate of tax from 28 per cent to 18 per cent on different FMCG like shampoo, washing powder and detergent, leaving only 50 items taxable at the rate of 28 per cent.

One of the major reductions of the GST was on food served at restaurants and eateries, which was brought down from 18 per cent to 5 per cent without input tax credit.

“The departments concerned have been asked to initiate strict legal action against the violators,” the officer said.