P&G India made Rs 250-crore undue profit, says GST probe

New Delhi, April 23

The GST profiteering investigation arm has found leading FMCG firm P&G India guilty of not passing on GST rate cut benefits to the tune of about Rs 250 crore by commensurate reduction in prices.

Based on a complaint filed before the standing committee, the Directorate General of Anti profiteering (DGAP) investigated the books of accounts of P&G India pre and post November 15, 2017, and concluded that the consumer goods manufacturer has not lowered prices of certain of its products despite cut in GST rate to 18% from 28%.

“The DGAP report has concluded profiteering worth Rs 250 crore by P&G. The National Anti Profiteering Authority will pass a final order on the quantum of profiteering after hearing the company’s views,” an official said.

P&G’s India is the manufacturer of washing powder brands Ariel and Tide; shampoo brands Heads & Shoulders and Pantene; cosmetics brand Olay, and shaving and dental hygiene brands Gillette and Oral-B. It also manufactures products under the brand name Ambi Pur, Pampers, Vicks and sanitary napkin Whisper.

When contacted, a P&G spokesperson said “as a responsible corporate, P&G has always been committed to passing the net benefit of GST rate reduction to the consumers. We have passed the net benefit and communicated the same via advertising in mass media to help increase awareness with the consumers, shoppers and retailers”.

The GST rates on about 178 products were cut by the GST Council with effect from November 15, 2017. The rate rate on washing powder, shampoo, cosmetics and dental hygiene were slashed to 18% from the highest slab of 28%. As per GST anti-profiteering rules, companies have to pass on the benefit of reduction of taxes to consumers by way of commensurate cut in product prices. However, there have been complaints from consumers that the firms have increased the base price of products and then charged the lower GST rate, thereby keeping the MRP of products the same in pre and post tax rate cut. — PTI