75% consumers doubt firms will pass on GST rate cut benefits: Survey

LocalCircles' survey found that 42% of consumers were only "partially confident" and 33 per cent were "not confident" about companies lowering MRP in line with the revised GST rate

As the new Goods and Services Tax (GST) rates near implementation, three in four consumers doubt that companies will cut prices to reflect the changes, according to a survey conducted by LocalCircles.

 

The survey, released on Tuesday, found that based on past experiences, 42 per cent of respondents were only “partially confident” and 33 per cent were “not confident” about companies lowering maximum retail prices (MRP) or service charges in line with the revised GST rates. Only 25 per cent said they were “quite confident" that the firms would pass on the benefits to the customers.

 

The GST Council, earlier this month, approved a revised tax structure under which most goods and services will be taxed at 5 per cent and 18 per cent. However, some goods, like carbonated drinks, tobacco products, etc, will fall under the ambit of "sin" goods, attracting a GST rate of 40 per cent. The new rates will take effect from September 22.

 

 

Most people want govt intervention

 

According to LocalCircles' report, 87 per cent of the respondents want the Centre to revive an anti-profiteering or unfair trade practice enforcement mechanism to ensure that the benefits of lower tax rates are passed on to consumers.

 

“This demand of the consumers is not unjustified, as in the past too, benefits to lowered tax rarely get reflected in the MRP of products. Instead, on the pretext of higher input costs, brands are known to retain the MRP or even raise it,” the survey noted.

 

Blurb: The National Anti-profiteering Authority (NAA) was established in 2017 under the Central GST Act to keep a check on companies from pocketing benefits from GST rationalisation instead of transferring them to consumers. It dissolved in December 2022, with its functions moved first to the Competition Commission of India (CCI) and later to the GST Appellate Tribunal. 

 

The Centre, however, has not announced any plans on anti-profiteering yet, though a senior official told Business Standard last month it may consider invoking such measures for two years.

 

“While the Centre remains committed to market-driven pricing, concerns over unfair profiteering cannot be ruled out if companies fail to reduce maximum retail prices (MRPs) in line with lower tax rates. We are planning to invoke anti-profiteering measures for up to two years so that businesses don’t pocket benefits of the lower rates," the officer said.

 

Meanwhile, several firms have welcomed the GST overhaul, with some of them also announcing rate cut benefits for consumers. The LocalCircles survey recorded responses from over 39,000 people from across 314 districts, with 61 per cent male and 39 per cent female participants. 42 per cent of respondents were from tier 1, 28 per cent from tier 2 and 26 per cent of respondents were from tier 3 & 4 districts, the report added.