Centre to keep watch to ensure lower prices follow GST revamp

NEW DELHI: Govt has drawn up elaborate plans to monitor price changes following Wednesday’s move to slash GST on nearly 400 items, while expecting industry to pass on the benefits to consumers from Sept 22.Senior govt officials told TOI the indirect tax authorities are collecting current prices of goods and services and will compare them with prices once the new GST rates kick in. “The transmission of cuts can take a few days as adjustments are needed, but govt will be watching,” the official said.NDA MPs have been asked to keep a tab to ensure the gains are not pocketed by companies. “The objective is to ensure consumers start getting the benefits during Navratra, and the impact of changes is tangibly felt by Diwali,” said an official, referring to the cutoff date set by PM Modi. Industry sources said finance ministry has reached out to some of them with this message. While the law lets govt use anti-profiteering clauses, it wants industry to voluntarily share gains with consumers. Govt expects competition to take care of price cuts in most sectors with officials arguing that industry recognises that those who don’t pass on the benefits will suffer as consumers are sure to switch to those who reduce prices.There are, however, concerns that some of the sectors, where cartelisation has been a concern, and insurance, where industry is worried over the withdrawal of input tax credit, may not transfer all the gains to the consumer.An official said public sector insurance companies, which include the four general insurers and the behemoth LIC, have been asked to pass on the entire benefit of exemption to consumers – a move that will make it tough for private players to avoid doing so. The GST Council led by finance minister Nirmala Sitharaman has decided to exempt life and health insurance purchased by individuals from GST, a huge gain given that these covers currently attract 18% tax.With the GST on cement has been lowered from 28% to 18%, a long-standing demand from the sector, the price of every bag is expected to come down by Rs 25 to Rs 30, JM Financial estimated.“The good news is that every sector has committed that in the interest of consumers, faster growth and expanding the market, they will pass on the entire benefit to consumers. It is difficult for a set of companies to come together and hold back the benefit since consumers know GST has been lowered,” commerce and industry minister Piyush Goyal said.Several companies, including Amul, Mondelez, Godrej Consumer Products and Colgate, have committed to ensuring that cuts flow through to shoppers. Meanwhile, industry chambers called on companies to reduce prices, in line with the tax cuts. Ficci senior vice-president Anant Goenka said the lobby group will work with its members to ensure the benefits are passed on to consumers.CII director general Chandrajit Banerjee, too, said that industry will act swiftly to lower prices and lift demand and create jobs.“Assocham encourages industry to pass on these benefits to the consumers, which will help increase consumption and thereby drive a virtuous economic cycle,” added the industry body’s president Sanjay Nayar.