STOCK MARKET BSE NSE

FMCG firms top chart of consumer complaints after GST rollout

FMCG majors including Hindustan Unilever Ltd, Procter & Gamble India and Nestle were found to have profiteered from the lower tax regime.

Published: 18th December 2019 09:25 AM  |   Last Updated: 18th December 2019 09:25 AM   |  A+A-

FMCG

For representational purposes

By Express News Service

The last three years have seen the government pass at least three major GST rate cuts with the most recent cut introduced in January this year, but fast moving consumer goods (FMCG) firms seem to be reluctant to pass on the benefits to end consumers.

Data released by the Ministry of Finance showed as many as 42 consumer complaints were registered against FMCG firms for overcharging customers since GST roll out in 2017. GST rates were cut across categories to reduce tax incidence on consumers and all companies were expected to pass on the benefit by lowering prices in proportion to the rate reduction.

It was, however, found that many companies had not passed on the benefits of lower tax and indulged in profiteering. Complaints were later filed against them and the GST anti-profiteering watchdog National Anti-profiteering Authority (NAA) — which has been tasked to ensure traders don’t realise unfair gains by charging high prices from consumers in the name of GST — took up the cases.

“We also have complaints where companies have increased prices within one month of reducing it. While, some brands also tend to first increase the price ahead of a cut and later slashes it,” said a senior NAA official.

FMCG majors including Hindustan Unilever Ltd, Procter & Gamble India and Nestle were found to have profiteered from the lower tax regime. Just a few days ago, Nestle was pulled up by the NAA for not passing on GST rate cut.

In an order on its website, the authority said the consumer goods maker made undue profits to the tune of `89.73 crore on chocolate products, instant noodles and pasta, wafer chocolates, instant coffee products, curry paste, among others, that it makes under the brand names Nescafe, Maggi and Kitkat.

While the firm has already deposited Rs 16.58 crore in Consumer Welfare Fund under the Department of Consumer Affairs, it will now have to pay the remaining Rs 73.14 crore with interest. Experts say it is difficult for companies to assess the exact impact of lower tax given that they have multiple similar products in one category.

For instance, they sell products for as low as Rs 2 for a shampoo sachet and when the rate is lowered, they are not in the position to exactly assess the impact on price. Even if the assessment is done and it is found that the price should be lower by 30 paise, transaction becomes difficult as currency of that denomination is not available.


TAGS
FMCG GST

Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp