New Delhi, November 16: With lower GST rates coming into force from November 15, the government has urged states to ensure GST cuts passed on to consumers. The 23rd GST Council Meeting on Friday revised the rates of the earlier 28-percent levied items to 5-18 percent. As many as 178 items of daily use have been shifted from the top tax bracket of 28% to 18%, while a uniform 5% tax was prescribed for all restaurants, both air-conditioned non-AC.

Major FMCG companies like Hindustan Unilever, Dabur, Amul, GlaxoSmithKline, Procter & Gamble, Nestle and Perfetti Van Melle informed that they are in process of reducing prices of commonly used items to pass the benefits to consumer. In a relief to consumers and businesses, the GST Council last week reduced tax rates on over 200 items, including shampoo, detergent, chewing gum, chocolates and beauty products.

FMCGs hail the revised tax structure:

“HUL remains committed to passing on the benefits of GST reduction to the consumers. We are reviewing all our networks so that we can commence production of products with lower prices as soon as possible,” an HUL spokesperson was quoted by PTI. He added saying that in many cases, the production with lower prices will commence this week itself and price changes will be communicated in due course.

“We welcome this step by the government and will pass on the benefits to the consumers,” a P&G spokesperson said adding that the company looks at GST as a positive reform.  “GST is a transformational reform. The recent changes augur well for consumers. We are evaluating the implications given our wide portfolio of FMCG products,” an ITC spokesperson said.

The companies have asked their channel partners to reduce prices in line with the steep reduction in the GST rates.  The tax rate on daily used items like coffee, custard powder, dental hygiene products, polishes and creams, sanitary ware, after-shave, deodorant, detergent and washing power, razors and blades, has been cut from 28% to 18%. As per reports, large retail outlets have started advertising the revised prices of FMCG items on account of reduction in tax rates. The other that have been placed in the 18% slab include detergents, shampoos, hair cream, wire and cables, furniture, mattress, trunk, suitcase, hair dyes, make up, fans, lamp, rubber tubes and microscope.

The 28% slab is now restricted to luxury and demerit goods like pan masala, aerated water and beverages, cigars and cigarettes, tobacco products, cement, paints, perfumes, ACs, dish washing machine, washing machine, refrigerators, vacuum cleaners, cars and two-wheelers, aircraft and yacht.