Only 10% consumers see full GST benefit, 3 in 10 see cuts on food: Report

The survey highlights that while appliances and vehicles benefit from the new GST cuts, the promised price reductions on packaged foods and medicines remain elusive for most consumers

A week into India’s revised Goods and Services Tax (GST) regime, fewer than three in ten consumers report seeing the benefits of lower rates on essential items such as packaged foods and medicines, according to a nationwide survey conducted by LocalCircles. The survey, which received over 78,000 responses from more than 27,000 consumers across 332 districts, highlights a mixed picture of the first week of GST 2.0.

 

Vehicles and larger appliances appear to be the exception: seven in ten consumers purchasing a vehicle confirmed receiving the full benefit of the reduced tax.

GST reform 2.0: What changed

• GST on packaged food items like paneer, milk, and certain medicines reduced from 18 per cent to 5 per cent or even nil.
• GST on larger consumer electronics, including air-conditioners, refrigerators, and large TV screens, cut from 28 per cent to 18 per cent.
• Gym memberships and other services now attract a lower 5 per cent tax rate, down from 18 per cent.

 

Survey findings: Who’s gaining, who’s missing out?

1. Packaged food products

Despite the reduction of GST on many packaged food items, only 10 per cent of consumers confirmed receiving the full benefit of the new rates in the first week. Another 21 per cent reported partial reductions, while 47 per cent noticed no price change at all.

 

The discrepancy arises because many stores are still working with existing stock, with new prices not being reflected on the shelves. In several cases, retailers are passing on price cuts only at the counter or once the new MRPs are updated in their systems.

2. Medicines

Similarly, the promised price reduction on medicines has not reached most consumers. Only 10 per cent of those who purchased medicines reported receiving the full benefit of GST cuts, with 62 per cent seeing no change. Retailers face a significant challenge in updating the price lists for medicines, which often come with varying supplier agreements and shelf lives. 

3. White Goods, appliances, and electronics

Electronics, white goods, and appliances were among the most anticipated beneficiaries of the GST reform. While 34 per cent of consumers confirmed full benefit, another 33 per cent saw only a partial reduction, with the remaining 33 per cent seeing no change in price. This mixed result can be attributed to inconsistencies in stock availability and distribution, with some retailers yet to receive updated price lists from manufacturers or wholesalers.

4. Vehicles

Vehicles, particularly two-wheelers and small cars, were the biggest winners under GST 2.0. Seventy six per cent of vehicle purchasers confirmed receiving the full benefit of the reduced tax rate, with 24 per cent reporting partial benefit. This is perhaps the most successful area of GST 2.0, with consumers clearly benefitting from the new pricing structure. 

Why aren’t consumers seeing price cuts?

Despite the government's intent to pass on the GST benefits, several factors are preventing full price reductions at the consumer level:

 

Old stock on shelves: Many stores still have stock priced under the old GST regime. As these products sell out, new stock with updated MRPs will replace them, but this may take time.

 

Lack of coordination with retailers: Many smaller retailers have not yet received updated price lists from distributors, nor clear directives from brands about how to implement the new GST rates. Some retailers have displayed notices indicating that price adjustments will be made at the counter.

 

Complexity of FMCG supply chains: For fast-moving consumer goods (FMCG), like food and medicine, the last-mile retail experience is far more complex compared to high-ticket items like vehicles. The sheer number of small retailers across India makes it difficult to ensure price consistency immediately.

Survey questions

Below is a summary of the questions asked in the survey and the responses received: 

Questions	Responses
	Full Benefit	Partial Benefit	No Benefit	No Response
Packaged Food Products: "Did you pay less after the GST reduction from 18 per cent to 5 per cent?"	10 per cent	21 per cent	47 per cent	21 per cent
Medicines: "Did you pay less after the GST reduction from 18 per cent/12 per cent to 5 per cent?"	10 per cent	24 per cent	62 per cent	4 per cent
Appliances / Electronics: "Did you pay less after the GST reduction from 28 per cent to 18 per cent?"	34 per cent	33 per cent	33 per cent	-
Vehicles: "Did you get the benefit of the GST reduction of 10 per cent?"	76 per cent	24 per cent	-	-