Tax cuts have been implemented nationwide. When will the price cut happen? The government is keeping a close eye on the situation..
GST has been implemented as the country's biggest reform. Taxes have been reduced on the prices of over 90% of the country's products. Now, the biggest question is when the price cut will occur. Reports indicate that the central government will monitor whether companies are actually passing on the benefits of the tax cuts to customers or retaining them. Two people familiar with government discussions, quoted in media reports, said the government will maintain "prudent oversight" of the tax cut implementation but will avoid any interference from the administrative machinery. If corporate profiteering is detected, the government will not hesitate to implement a formal mechanism.
The central government hopes that companies will adhere to their public commitments to reduce prices, but if consumers do not receive relief, the option of a formal enforcement mechanism has not been ruled out. The tax cut follows Prime Minister Narendra Modi's promise of tax relief in his Independence Day speech. Finance Minister Nirmala Sitharaman has expressed her commitment to ensuring that the benefits reach households.
The government will keep a close watch.
Media reports, quoting two sources, stated that all government departments are vigilant about ensuring consumer benefits and will monitor prices. They further stated that the government's engagement with the industry will be one of "caution and a soft approach," rather than using any administrative power. They stated that if cases of profiteering emerge, the government could invoke the Competition Commission of India (CCI) at any time. However, this is not being considered at this time, and signals from the industry suggest that prices will be reduced to pass on the benefits of GST rate reductions to consumers.
Anti-Profiteering Authority
In the early days of GST, there was a formal mechanism to prevent companies from usurping tax benefits; however, this mechanism ended in April this year. The main bench of the GST Appellate Tribunal will continue to adjudicate past cases, but no authority is accepting new complaints. Sources say creating a short-term regulator to monitor profiteering is impractical, as it would be difficult to eliminate it later.
Sources said that to ensure that retailers pass on the benefits of the tax cut to end users, the industry has been advised to take steps, including instructing dealers to ensure that the prices charged to consumers reflect the tax reduction. They also have the option of displaying stickers indicating the revised prices. These steps are expected to ensure that retailers pass on the benefits of the tax cut to consumers.
Price Cut Ads
Companies have not broken the government's trust, however. They have made several announcements of price cuts following the GST cut through statements and newspaper advertisements. Several companies, including Life Insurance Corporation of India, United India Insurance Company, New India Assurance Company, cement manufacturer Nuvoco Vistas Corporation Limited, sewing machine manufacturer Usha, air conditioner manufacturer Whirlpool, healthcare and pharmaceutical company FDC, tire manufacturer MRF Limited, and child care products manufacturer Chicco, have advertised price cuts to pass on the benefits of the GST reduction to customers.
Chandrajit Banerjee, Director General of the Confederation of Indian Industry (CII), stated in a media report that the industry body is encouraging its members to ensure that the tax cut benefits are passed on promptly and transparently. Banerjee said, "We are in discussions with our members across various sectors to revise price lists, reorganize supply chains, and update retail stores so that customers see the lower rates without any delay." Banerjee added that extending tax benefits to families will boost demand, strengthen consumer confidence, and boost growth.
Finance Minister's Stand
After the GST Council announced the abolition of the 12% and 28% tax slabs and the introduction of tax cuts on several products and services on September 3, Finance Minister Sitharaman said in an interview on September 5 that her next big challenge would be ensuring that businesses pass on the benefits of the tax rate cuts to the common man. The tax relief covers a range of products and services, including packaged food, consumer electronics, personal health and life insurance policies, hotel accommodation, automobiles, cement, television sets, and kitchen and tableware. Experts pointed out that a government order dated September 18 stated that while it is not mandatory to affix revised MRP stickers on unsold stock manufactured before September 22, businesses are encouraged to do so to maintain transparency and avoid confusion among consumers.
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