BackFMCG firms lower prices after GST rate cut
ITC, Dabur, HUL and Marico have reduced prices of various products already in stores to pass on the benefits of GST rate cut to consumers
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New Delhi: Packaged goods companies have started lowering the prices of products that are already in retail stores to pass on benefits they received from the GST rate cut.
New Delhi-based Dabur India Ltd on Tuesday said in a statement that the company had reduced prices of its existing stocks by 9% across categories like shampoo, skin care and home care products.
“The company is passing on the benefits on existing stocks by providing primary discount of 9% to its trade partners," Lalit Malik, chief financial officer of Dabur India, said. “In accordance with the GST laws, we had last week communicated to all our business and trade associates directing them to start charging the revised lower GST rates, wherever applicable, on all existing stocks. We have also directed them to pass on the GST benefit to the end consumer."
Kolkata-based cigarette-to-shampoo maker ITC also revised prices. “ITC has modified the price of its relevant products keeping in mind the applicable rates under the recent GST notification," said an ITC spokesperson.
The move comes within days of Central Board of Excise and Customs (CBEC) chairperson Vanaja Sarna writing to packaged consumer goods companies to immediately revise maximum retail prices of products to conform with the new GST rates.
The GST Council, at its meeting on 10 November, had cut GST for 178 items from 28% to 18%, effective 15 November, , leaving only 50 items in the highest tax slab. The tax rate was reduced on a range of goods, from granite and marble to chewing gum and chocolates, deodorants and detergents.
Before Sarna’s letter, most packaged consumer goods companies, including Dabur, ITC and Hindustan Unilever Ltd, had communicated the price changes to their wholesalers, stockists and prominent retail partners, requesting them to sell at the new prices. But it was not easy for the companies to communicate with an estimated 9 million retail outlets, most of which they do not deal with directly.
Fresh stock with new maximum retail prices, based on revised GST rates, is expected to be in retail stores within the next couple of weeks.
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