Only 2 in 10 consumers felt GST rate cut benefits in 2018-19, shows survey

Only 18 per cent of consumers say GST rate cuts in 2018-19 reached them; half blame brands and retailers for not reducing MRPs, while 78 per cent demand strict enforcement to pass on benefits

A new consumer survey has revealed that the majority of Indian buyers did not feel the impact of the Goods and Services Tax (GST) rate reductions during the 2018-19 rationalisation exercise. Despite government efforts at the time to ensure that benefits of lower tax rates were passed on, only two out of ten consumers said they actually experienced price relief.   The findings are especially relevant as the GST Council recently announced another round of rate cuts, effective September 22. 

According to the survey conducted by LocalCircles, only 18 per cent of respondents believed that the GST rate reduction benefits were passed on to them after the 2018-19 changes. 

 

In contrast, 50 per cent said the relief was absorbed at different points in the supply chain, with manufacturers, distributors, stockists or retailers failing to reduce Maximum Retail Prices (MRPs) or offer discounts.     

    The LocalCircles survey received over 36,000 responses from citizens across more than 319 districts of India. Of the respondents, 61 per cent were men and 39 per cent women. Among them, 44 per cent from Tier-I cities, 24 per cent from Tier-II, and 32 per cent from Tier-III, Tier-IV, Tier-V, and rural districts. Participation was restricted to registered citizens on the LocalCircles platform, ensuring verified inputs. 

When asked who bore the most responsibility for not transferring benefits, 26 per cent of consumers pointed to manufacturers who did not lower MRPs, while 15 per cent held retailers accountable for keeping prices unchanged despite lower taxes. Another 9 per cent blamed distributors and stockists for not passing on the savings. Only a small fraction — about 18 per cent overall — acknowledged receiving any direct benefit in the form of reduced MRPs or discounts.

 

Strong demand for enforcement

The study also revealed widespread support for stronger enforcement measures. As many as 78 per cent of respondents said that brands benefiting from GST rate cuts must establish mechanisms to ensure retailers pass on the savings to end customers. Only 13 per cent felt this responsibility should rest with the government, while 5 per cent opposed such monitoring altogether. 

The call for stricter measures comes against the backdrop of the anti-profiteering authority  — which earlier oversaw such issues — no longer being operational. With no fresh mandate under the Consumer Protection Act, 2019 to classify non-passing of benefits as an unfair trade practice, much of the responsibility now rests on brands to ensure compliance.     

 

Current context of GST cuts

The findings gain importance as the GST Council has announced fresh rate cuts, which will come into effect from September 22.  The government has directed companies to display both pre- and post-GST rates at retail outlets and submit tentative price lists for consumer durables and other products. It expects around 90 per cent of the cuts to be passed on to consumers, with potential cost reductions of 10 per cent for durables and up to 15 per cent for automobiles.