CBEC chief tells firms, restaurants to lower prices

Central Board of Excise and Customs (CBEC) Chariman Vanaja Sarna has written to 100 major companies including ColgatePalmolive, Dabur, Nestle, and Hindustan Unilever, and 15 restaurants including McDonald´s, Café Coffee Day, and MTR, to pass on the benefit of reduction in goods and services tax (GST) rates to consumers.

The move comes amid instances of companies and restaurants persisting with high rates, raising profiteering concerns.In a letter to company heads and associations, Sarna asked them to go for a commensurate reduction in the prices of products and give it wide publicity.“While it is a legal requirement, you will agree that for all citizens this is an important social responsibility.

It would be most helpful if the reduced prices are also given wide publicity,” the letter reads.The letter was sent a week after the GST Council went for a massive trimming of items in the 28 per cent bracket, besides reducing rates on items in the 18 per cent and 12 per cent categories.

The Council in the meeting in Guwahati on November 10 reduced the rates of more than 200 items of common use. The rate of 176 items was reduced from 28 per cent to 18 per cent.They include chewing gum, shampoo, detergent, chocolate, beauty products, sanitary ware, leather clothing, cookers, stoves, detergent and washing power, razors and blades, cutlery, storage water heater, batteries, goggles, and mattresses.

The change in rates became effective on November 15.Now only 50 items remain in the 28 per cent categoryThe rate for six items was reduced from 18 per cent to 5 per cent, for eight items from 12 per cent to 5 per cent, and for six items from 5 per cent to nil.Restaurants saw the steepest reduction to 5 per cent from 18 per cent, but will not get input tax credit.

However, there were reports of restaurants hiking the base price while charging 5 per cent. Only restaurants in fivestar hotels with tariffs of more than Rs 7,500anight will have to pay 18 per cent. “As an industry leader,Iappeal to you to join hands with the government in benefitting the common man by passing on the benefit of the reduced GST rates through commensurate reduction in the process of your products,” said Sarna in the letter.

The chairman is planning to write to more companies and restaurants on this.The government had said that November 15 onwards consumers must be charged the reduced prices even for items in old stocks.

The company or wholesalers could claim refunds for the additional tax he may have paid on those.“A whole saler or company will be able to getarefund of any additional tax he may have paid to the whole saler or input tax credit,” said a government official.The government is banking on increases in demand and improved compliance rates after a sharp GST reduction to meet its revenue target for the FY. “The reduction in GST rates is expected to encourage domestic demand and investment.

However, this is incumbent upon the now reduced rates resulting in a reduction in consumer prices or MRPs of the specified items,” said the letter.However, government officials said that while it might be easy to catch companies not passing on the benefits, that might not be the case for restaurants.“I can´t stop a restaurant from increasing prices because it may claim that it is not getting the input tax credit benefits anymore.

Big restaurants have large machines, mixers, etc, which they used to claim input tax credit,” said an official.He added that profiteering by a restaurant would be difficult to prove.The Union cabinet last week approved creating the posts of chairman and members of the National Anti Profiteering Authority (NAA). Union Finance Secretary Hasmukh Adhia had said that a company has to ensure that their entire distribution chain —whole salers and retailers— pass on this tax cut if they want to escape action by the NAA

GST RATE CUTS PRUNING EXERCISE

GST rates of 178 Items were taken out of the 28% bracket.The items include Chewing gums Chocolates Detergents Shampoos Beauty products Electrical equipment Shaving creams Sanitary wares Watches Furniture

Eating out

AC/ NonAC restaurants to be taxed at 5% No input tax credit will be available Only restaurants in 5star hotels to be taxed at 18

The Business Standard, New Delhi, 21th November 2017

Household debt up, but India still lags emerging-market economies: RBI

Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...

External spillovers likely to hit India's financial system: RBI report

While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...

CA Online

Search This Blog