Skip to main content

CBEC Chief Missive to FMCGs Pass on Benefits Post GST Tweak

CBEC Chief  Missive to FMCGs Pass on Benefits Post GST Tweak
Letters sent to over 100 companies; move follows warning by finance secretary Hasmukh Adhia
Keeping up the pressure on the consumer goods sector, the Central Board of Excise and Customs (CBEC) chairman has written to the biggest companies to ensure that cuts in the goods and services tax (GST) are passed on to customers. The GST Council has cut rates on 178 products including chocolates, detergent, toothpaste, shampoo, air freshener and shaving cream to 18% from 28% and the government is keen that this translate into lower prices for buyers.
“We have reached out to over 100 companies,” CBEC chairman Vanaja Sarna told ET. “This is essentially an appeal asking them to pass on the tax cuts to consumers.” India’s biggest fast-moving consumer goods companies include Hindustan Unilever, ITC, Nestle, Dabur, Godrej Consumer Products, Amul, Perfetti Van Melle, L’OrĂ©al and Mondelez.
A top executive at a large diversified consumer products maker confirmed it had got the letter. “We received a letter from CBEC, asking that benefits of the tax reductions announced by the GST Council be passed on to buyers,” he said. “We received the letter on Friday.”
Finance secretary Hasmukh Adhia had told ET that it was up to companies to ensure the benefits of tax cuts were passed on. “It is the company’s responsibility to ensure that its entire retail chain follows its directives on pricing,” Adhia said in the November 20 interview. “If a trader is not selling a good at revised MRP (maximum retail price), then it is the responsibility of the company.”
Boost to Consumption
“It (the company) will have to respond to the National Anti-profiteering Authority on this. Action can only be taken against organised players as they are the ones who decide MRP. We don’t want that industry should suffer, but at the same time consumers should also not suffer,” Adhia had told ET.
The cabinet last week approved the establishment of the National Anti-profiteering Authority (NAA) in this regard.
The GST Council had on November 10 moved 178 items, including washing powder, toothpaste, tooth powder, shaving cream, deodorants and chocolates, to the 18% GST slab from 28%. A day after the notification of reduced rates by the Centre and states, companies had begun instructing trade partners, including distributors, stockists and retailers, to sell products on which taxes were reduced at lower prices to consumers, irrespective of the printed MRP. Companies have until December to apply new price stickers according to an order issued by the consumer affairs ministry.
But the government is keen that even before this happens, a process that may take time, companies direct the trade and also communicate to consumers directly on price reductions.“Yes, we are in receipt of the letter over the weekend,” said a cosmetics company executive. “We are fast-tracking on packaging products with revised prices. There is no question of not passing on the benefits to consumers immediately.
The reduced pricing is expected to spur consumption in a category that has otherwise been subdued. The existing inventory is expected to be replaced with fresh stock bearing new price tags in about twofour weeks.A government statement issued late Monday evening said CBEC chairman Sarna has written to all major fast-moving consumer goods companies, pointing out the need to immediately revise MRP for products on which tax rate has been reduced.
The Economic Times, New delhi, 21th November 2017

Comments

Popular posts from this blog

RBI minutes show MPC members flagged upside risks to inflation

RBI minutes show MPC members flagged upside risks to inflation Concerns about economic growth and easing inflation prompted five of the six monetary policy committee (MPC) members to call for a cut in the repo rate, but most warned that prices could start accelerating, show the minutes of the panel’s last meeting, released on Wednesday. The comments reflected a tone of caution and flagged upside risks to inflation from farm loan waivers, rise in food prices, especially vegetables, price revisions withheld ahead of the goods and services tax, implementation of house rent allowance under the 7th pay commission and fading of favourable base effect, among others. On 2 August, the panel chose to cut the repurchase rate—the rate at which the central bank infuses liquidity in the banking system—by 25 basis points to 6%. One basis point is one-hundredth of a percentage point. Pami Dua, professor at the Delhi School of Economics, wrote that her analysis showed “a fading economic growth outlook, as …

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

Differential Tax Levy under GST: Food Firms May De-Register Trademarks

Differential Tax Levy under GST:Food Firms May De-Register Trademarks The government’s decision to charge an enhanced tax rate on trademark food brands is leading several rice, wheat and cereal manufacturers to consider de-registering their product trademarks. Irked by the June 28 central government notification fixing a 5 per cent goods and services tax (GST) rate on food items packaged in unit containers and bearing registered brand names, the industry has made several representations to the government to reconsider the differential tax levy, which these players say is creating an unlevel playing field within these highly-competitive and low-margin industries. Sources say that the move has affected the packaged rice industry the hardest and allowed the un-registered market leaders, India Gate and Daawat, to gain advantage as compared to other registered brands such as Kohinoor and Lal Qilla. Smaller players are even more worried with this enhanced rate of tax (against the otherwise …