GST rate cuts now benefitting consumers more than before: Survey

  • 23-Apr-2019
  • GST rate cuts now benefitting consumers more than before: Survey

Consumers are of the view that they are benefitting from the Goods and Services Tax (GST) rate cuts now more than before as businesses and traders increasingly lower prices to the extent of the reduced tax rates, an online survey of 16,000 people has found.

The survey held by online community of consumers Local Circles has shown a steady improvement in customer experience between June 2018 and April 2019 on getting the benefit of tax cuts intended for them. It is often the customer perception that leads them to complain against alleged profiteering by companies by way of not reducing the prices in line with the tax cuts. The trend shown by the survey indicates that prices of household items may soften further.

The survey said 30% people believed in April that they are getting the benefit of tax cuts on items like shampoo, cosmetics and groceries, up from 15% in June 2018 and 27% in January 2019. Federal indirect tax body, the GST Council, had made large-scale tax cuts in the on items such as shampoo, cosmetics, hair oil and groceries from 28% to 18% in November 2017. It had also reduced tax rates applicable to restaurants from 18% to 5% in November 2017. The survey showed that one in three people believe in April that they are benefitting from the tax cuts on restaurants, up from about one in four in June 2018.

The survey also said that 29% of people now believe that companies are passing on the benefit of the July 2018 tax cuts on home appliances to consumers compared to 20% in October 2018. In July 2018, the Council had reduced tax rate from 28% to 18% on refrigerators, washing machines, small televisions and vacuum cleaners. While there is improvement in customer experience, there is still a long way to go in ensuring full benefits reach consumers, the survey indicated. About 40% people still believe they are not getting the benefit of tax cut on home appliances, compared to 47% in October 2018.

The National Anti-profiteering Authority (NAA) set up to ensure that businesses pass on the tax cut relief to consumers has already asked many companies in the FMCG, restaurant and trading business to pay back the alleged profiteered amounts to consumers or to deposit in a consumer welfare fund.

The GST Council chaired by union finance minister and having state ministers as members announced the tax cuts as part of a rationalization of rates after India moved to the more transparent new indirect tax regime in July 2017. In January 2019, the Council slashed tax rates on 22 items, of which seven—including digital cameras, TVs with screen size upto 32 inches and power banks--were from the highest slab of 28%.

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