Consumers Not Feeling GST Rate Cut Benefits on Essentials, Survey Finds

A nationwide survey conducted by LocalCircles across 342 districts in India indicates that many consumers have not seen reduced prices for essential goods, even six weeks after the Goods and Services Tax (GST) rates were revised. The GST Council had lowered rates on approximately 80 items, aiming to ease household expenses and boost consumption, particularly for packaged foods, medicines, electronics, and vehicles.

The survey found that only 13% of respondents reported full price benefits on packaged foods, with 42% seeing no reduction. Medicines fared even worse, with 49% of consumers reporting no price drop, despite directives from the National Pharmaceutical Pricing Authority (NPPA). Retailers cite issues with old inventory purchased at higher rates and a lack of manufacturer support as reasons for the delay in passing benefits.

For appliances and electronics, where rates dropped from 28% to 18%, 33% of consumers saw full benefits, but 28% reported no change. The automotive sector showed better compliance, with 47% of buyers receiving full GST benefits, contributing to strong festive sales.

Impact: This disconnect between policy intent and consumer experience can negatively affect consumer sentiment and spending, potentially impacting the revenues and profitability of companies in the affected sectors. The delays suggest underlying commercial friction and implementation challenges in the supply chain. Impact Rating: 7/10

Difficult Terms Explained: Goods and Services Tax (GST): A comprehensive indirect tax levied on the supply of goods and services in India. GST Council: The constitutional body responsible for making recommendations on GST policies to the Union and State Governments. National Pharmaceutical Pricing Authority (NPPA): A government agency that controls the prices of pharmaceutical drugs in India. MRP: Maximum Retail Price, the highest price that can be charged for a product. GST 2.0: Refers to the second phase or revised set of Goods and Services Tax rates and measures introduced by the government. Input Tax Credit (ITC): A mechanism in GST that allows businesses to claim credit for taxes paid on inputs used in the manufacturing or supply of goods and services, reducing the final tax burden. Composition Scheme: An optional scheme under GST for small taxpayers to pay taxes at a fixed rate on their turnover, without the benefit of input tax credit. FMCG: Fast-Moving Consumer Goods, products that are sold quickly and at a relatively low cost, such as packaged foods, toiletries, and other everyday items.