Following substantial GST rate cuts under the new GST 2.0 reforms, the government has issued a clear directive: businesses must pass on the benefits of lower GST to consumers. State governments, along with the Central Board of Indirect Taxes (CBIC), are actively engaging with industry stakeholders to ensure the transparent transmission of tax relief
What’s Driving the Push?
- Recent GST rationalisation slashed rates on essentials and daily-use items—such as soaps, toothpaste, small cars, and ACs—from 12–28% down to 5% or 18%, aiming to boost purchasing power ahead of the festive season.
- To prevent businesses from hoarding these benefits for margin gains, the government is reinforcing anti-profiteering protocols to guarantee that price cuts reach consumers promptly.
- Commerce & Industry Minister Piyush Goyal emphasized that this GST reform is “game-changing” and urged all stakeholders to ensure that consumers reap its full advantage.
How It’s Being Enforced
- The government is reviving safeguards against profiteering, backed by Section 171 of the CGST Act (anti-profiteering clauses). According to the law, suppliers must pass on benefits from tax cuts or input credits via commensurate price reductions.
- Though the National Anti-Profiteering Authority (NAA) is not immediately being reinstated, authorities—both central and state—are coordinating to monitor compliance and will act swiftly if violations occur.
What Businesses Are Doing
- Many FMCG companies are responding with MRP cuts on large packs and value promotions. However, for very low-priced items (₹5–₹20 range), they are more likely to offer extra quantity rather than reduce prices straight away.mint
- This approach helps maintain consumer affordability while managing pricing structures and supply chain realities following rate adjustments.
Summary Table
| Aspect | Details |
|---|---|
| Government Directive | Companies must pass GST rate benefits to consumers |
| Enforcement Mechanism | Anti-profiteering provisions under Section 171, monitored by CBIC & states |
| Industry Approach | Price cuts in bulk packs; added value in small packs; cautious adjustments |
| Strategic Goal | Boost consumer spending, maintain fairness, and stimulate festive demand |
