NAA Approves Quantity Over GST Rate Reduction

The National Anti-Profiteering Authority doesn’t want to involve on rate cut tactics of sellers. It just wants that the benefits of a rate reduction in Goods and Services Tax should reach the end users. Many of the companies have adjusted the quantity as per the reduced GST rates instead of reducing the prices.

The FMCG companies which had increased the quantity instead of reducing the prices can now feel relaxed as the NAA understands that consumers are getting the rate cut benefits.

Previously, the industry was in a dilemma that NAA will accept the weight increment in terms of price cut benefits or not.

According to FMCG companies they provide packed products as per the market demands and increasing the product in weight instead of reducing the price is the better way to relief the customers.

For example, if a sachet costs Rs. 1 along with 28% GST, but now the rate reduced from 28% to 18%. Now, the sachet will cost 92 Paise. As 92 Paise transaction is not possible, so companies have to increase the quantity by 8% to fit in the rate with applicable taxes.

Read Also: Wet Baby Wipes to Attract 18% GST As Cleared by Govt

Another reason behind the companies does not want to reduce the rate because if in future the prices go high, in that case, consumers will consider the product priced increased and go for other options. Hence, Increasing the product in quantity is the relevant solution to it.

But, there is no mentioning to increase the weight instead of the price in rules of the NAA. An official has also informed that the company can work on NAA’s popular trade practices. He further mentioned that whatever is the business practice, they have to prove that their customer is getting the rate reduction benefits and product packing should be according to the legal meteorological acts. This act mentions framework for quantity and price stickers of the packaged products.

Recommended: Interim FM Piyush Goyal Hints Towards GST Rate Slash

Many companies have increased the weight and returning the rate reduction benefits to consumers because in many cases it was not practical to reduce the price.