Most of the automobile firms have provided the benefits of the GST reduction to consumers, while the same is slow in other categories like packaged foods and medicines because of retailers’ unwillingness to sell at lower costs without the brands or manufacturers agreeing to make up for their losses, a community survey revealed.
Out of 10 customers surveyed, only 1 has obtained the GST rate revision benefits concerning packaged foods and medicines, and partial benefits have been provided to 2 out of 10 in the first week of enactment, as per the survey accomplished by LocalCircles. In this category, nearly 70% consumers have not obtained the benefits of the GST rate reduction.
In the second week (September 29 to October 5), 40% of consumers of packaged food who participated in the survey affirmed that they got the GST rate cut benefit, while another 18% reported receiving partial benefits.
Concerning appliances, white goods, and consumer electronics, 3 out of 10 consumers surveyed affirmed getting the full benefit of the GST rate reduction, while another 3 in 10 confirmed receiving partial benefit.
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In the survey, more than 74,000 consumers located in 341 districts participated.
The automobile category has emerged as the best to pass tax reduction to its consumers. It is affirmed by 70% of consumers who bought a vehicle in the first week of the enactment of the GST rate cut, and out of 10, only 2 confirmed getting the partial benefit.
On 80% of goods and services, the government has cut the GST w.e.f 22 September. On many medicines and packaged food items GST rate has been reduced to 5% which before was 18% or 12% and on a majority of appliances, white goods, consumer electronics, and automobiles, the tax has been reduced to 18% from 28%.
Sales have augmented with major brands and retailers from the GST rate, reporting a 25 to 100% rise in sales in the present year’s Navratri that concluded on October 1, when compared with last year’s Navratri festival. Automobile firms like Maruti Suzuki, Mahindra & Mahindra, Tata Motors, and Hero MotoCorp lead the sales volume.
In the second week, there was a minor deterioration in between passing the benefits in the auto sector. During the second week (Sep 29 – Oct 5), there was a 24% drop in the percentage of consumers getting the full or partial benefit of the GST rate reduction on vehicles and a 20% drop in those who got the full benefit when compared with the earlier week.
The same was the trend in appliances, white goods, and consumer electronics segments. There was a 15% reduction in the consumers who claimed to get a complete or partial advantage of the GST cut compared to the first week. There is a 10% reduction in consumers who are getting the full benefit.
The authorities shall be urged to investigate why the GST cut benefits are not being passed to all consumers.
The government needs to engage with FMCG and medicine brands to ensure that they and their distributors and stockists incentivise the retailers in ensuring that the customer gets the GST reduction benefit promptly.
