GST 2.0 lapses: FMCG products spark blame game between companies & distributors
New Delhi: Some lapses have emerged in passing the GST benefits to consumers in FMCG products, leading to companies and distributors blaming each other for the issues with select packs on certain channels even as the government plans action against erring firms and distributor partners. While some companies said the lapses and delays are at the distributors' end, distributors have alleged that some companies have selectively increased base prices of certain packs.
“Distributors can pass only what shows in the system from the companies’ end,” the chief of a large distributor entity told ET on the condition of anonymity. “A few large brands have increased base prices of some of their packs, which is not translating to lower prices,” the person alleged.
The lapses are particularly being called out in packs of Rs 20 and below, industry and trade executives said. Government officials said the Central Board of Indirect taxes and Customs (CBIC) may initiate action against brands and ecommerce platforms where base prices were raised after the goods and service tax (GST) rate cuts. There is enough provision in the law to initiate action, they added.
Gaps Transitory
Executives at FMCG companies such as HUL, Colgate-Palmolive, Himalaya Wellness and Perfetti Van Melle said all benefits are being passed on to consumers and said any gaps with respect to new packs and pricing are transitory. Almost all big FMCG companies have released advertisements announcing new prices of stocks manufactured with reduced prices. “For a limited period, products with both the old and new MRPs may be available in the market, and consumers are advised to ask for revised MRPs before purchase,” said a spokesperson for Hindustan Unilever (HUL), India’s largest consumer goods company. “Trade partners have been communicated to ensure that the benefits of GST rate reductions are passed on to the end consumers.”
The maker of Lux soap and Brooke Bond tea said it has passed on GST benefits to consumers “by either reducing prices or providing higher weight/volume, as applicable, to avoid odd pricing and coinage-related challenges and to ensure pricing simplicity.”
India’s largest oral care company Colgate-Palmolive, too, said it implemented the price reduction and passed the full benefit to its channel partners on existing inventory effective September 22 when the new GST rates were rolled out. “Consumers should expect to see the new prices on our new market packs by early November," said Prabha Narasimhan, managing director of Colgate-Palmolive (India).
The Central Consumer Protection Authority (CCPA), which is monitoring consumer complaints, has forwarded about 2,000 complaints to the CBIC.
