State authorities told to check if companies passing on GST cut benefits

New Delhi: In a drive to ensure companies passed on the reduction in Goods and Services Tax (GST) to consumers, the Centre has directed state metrology controllers to assist GST officers to cross-verify revised sales price (MRP) of pre -packaged commodities and consumer authorities will undertake a drive to check labelling. In the latest round, the GST Council cut tax rates on a host of white goods to 18% from 28% and exempted sanitary napkins from any tax effective July 27.

The government is keeping a close tab on the price scenario on the products that saw rate cuts to ensure the benefit is passed on to consumers and not pocketed by companies. The anti-profiteering machinery is also keeping a close watch on whether companies are passing on the benefit or not. had reported earlier this month that authorities were looking into instances of consumer durables companies not passing on the benefit to customers. The consumer affairs secretary had informed the GST Council about the directive, according to an office memorandum issued by the council.

“The memorandum on GST officers collaborating with state legal metrology controllers clearly demonstrates government’s seriousness to ensure that the impact of rate reduction and additional input tax credit reaches the intended beneficiaries that is the end consumers” said Harpreet Singh, partner, Indirect Taxes, KPMG. The consumer affairs ministry had earlier issued a directive under the Legal Metrology Act permitting companies to affix pasting or stamping of new prices on old when the rates were slashed in November last year and again in July this year.

As per the directive, revised MRP declaration can be by way of stamping or putting sticker or online printing provided original MRP continues to be displayed. Companies also had to advertise price changes and circulate notices to dealers. Abhishek Jain, Tax Partner, EY says “With this explicit directive by the government, industry, and specifically the consumer goods industry, should revisit and ensure passing on of any tax benefits which have accrued to them with implementation of GST.