Govt looking at cutting GST rates on white goods: report

The government is looking at reducing the incidence of tax on white goods such as refrigerators and air-conditioners under the goods and services tax from the current levels of 28 per cent with a view to increase consumer demand and thereby improve tax collections.

An increase in demand for white goods is also widely seen as a sign of economic growth.

This move is part of the government's continuing efforts at rationalising the GST slab rates applicable to various products.

Last week the GST Council slashed tax rates on fast-moving consumer goods and restaurants. The union cabinet had also approved the creation of National Anti-profiteering Authority (NAA) under GST to ensure that benefits of reduction in the new tax rates are passed on to the consumers with immediate effect.

Finance secretary Hasmukh Adhia today exhorted retailers and companies to immediately pass on the benefits of lower tax rates to consumer and has warned against continuing with jacked up prices on grounds that the old stocks have not been exhausted.

Companies, including FMCG firms, might be prosecuted if their retailers do not immediately cut the prices of products whose goods and services tax (GST) rates have been slashed.

''We have made provisions for the companies to claim the difference from the government as input tax credit. But I am not willing to accept their argument to postpone passing on the benefits to consumers till they have disposed of their old stocks.''

According to him, the new prices should be effective from 15 November.

The GST Council in its last meeting this month cut the tax rate on 176 items from 28 per cent to 18 per cent and on two to 12 per cent.

There was a huge demand to make these cuts. Speaking in a Doordarshan interview in which Business Standard was present, Adhia, who is also revenue secretary, said it was inconceivable that a 10 per cent cut in the price of, say, detergent products should be minuscule for consumers.

''We cannot track each retailer. So we have made it clear to manufacturers like FMCG companies that the onus is on them to ensure the retailers immediately pass on the benefits to the consumers if they want to escape action under the anti-profiteering clause of the GST.''

He advised companies to ''transparently'' advertise in newspapers by how much their prices had come down. Items on which tax rates have dipped include detergents, sanitary ware, suitcase, beauty products, chocolates, marble and granite, wall paper, plywood, and stationery articles. Making the changes in prices visible would be a measure of their standards of corporate governance. ''It is the responsibility of companies to inform their supply chain about the new price, going all the way down from distributors to wholesalers and retailers if they wish to escape the glare of anti-profiteering action by the government.''

He added that the ministry of consumer affairs given manufacturers the elbow-room to alter their maximum retail prices till December.

''But this does not mean they can wait till December. The new prices have to become effective immediately.''