Consumer Is Not King? Rise In Plaints Against FMCG Firms For Not Passing On GST Benefits To Purchasers

National Anti-profiteering Authority (NAA) has received more than 300 complaints on fast moving consumer goods (FMCG) companies, on account of overcharging. The complaints in recent weeks state that the firms are not passing on the benefits of GST cuts, reports Live Mint.

GST council made tax cuts in November 2017 on items such as groceries, shampoo, cosmetics, hair oil from 28 per cent to 18 per cent. List of products which were in the complaints include khadi products, baby wash, disinfectant gels, hair care products deodorants, handwashes, scented oils and cosmetics.

The rise in complaints suggests that manufacturers are facing difficulties in passing on the benefits of products on a par with rebated input costs and GST rate cuts.

“The FMCG sector has a very long supply chain, starting with the manufacturer and covering distributors, wholesalers, super stockists and retailers. This makes it virtually impossible for businesses to enforce a price change across the entire chain when a tax cut is announced on a given day,” said MS Mani of Deloitte India.

He further added that failure to pass on the tax benefits should not be construed as an intent to evade tax, as companies do highly value their reputations. A single FMCG company may supply a product to around 500,000 retail shops.

About 49 per cent of the over 7,800 complainants say that the benefits of GST cuts have not been received by them, according to a poll by LocalCircles, a social platform for government bodies to reach citizens. Only a meagre 5 per cent felt that the benefits had been passed on, while 17 per cent think they received partial benefits and 29 per cent did not have an answer.

The July 2018 tax cuts improved a little to 7 per cent of people claiming to have received benefits and 47 per cent claiming to have not received any.