NEW DELHI: Faced with the threat of anti-profiteering action, FMCG companies in India have fallen in line with government insistence that the benefits of GST rate cuts are passed on to consumers.

Earlier this month the GST Council cut tax rates on about 200 goods, with the changes becoming effective from November 15. “The benefit of reduction in the GST rate has to be passed on by the suppliers to the consumers by way of commensurate reduction in prices,” the Finance Ministry said in a statement on Monday.

“The reduction in GST rates is also expected to encourage domestic demand and investment,” it added.

The Finance Secretary had earlier warned of possible legal action against companies failing to comply, The Hindu reported; a National Anti-Profiteering Authority is also to be created to ensure any GST gains are passed on to consumers.

FMCG companies have accordingly announced price cuts, with Dabur, for example, reducing its prices on existing stocks of shampoo, skincare and home care products, according to the Financial Express.

“The company is passing on the benefits of existing stocks by providing a primary discount of 9% to its trade partners,” the company said.

P&G has also devised offers for existing stock, while HUL indicated that production of products at lower prices would begin as soon as possible.

The tax on some items has been slashed from 28% to 18%, including chewing gum, chocolates, coffee, deodorant, detergent and washing power, razors and blades.

The tax rate on condensed milk, refined sugar, pasta, curry paste and diabetic food has been cut from 18% to 12%.

Sourced from Financial Express, The Hindu; additional content by WARC staff