CBEC asks companies to reduce MRP and pass on GST rate cut benefits to consumers


The Central Board of Excise and Customs (CBEC) has mandated companies to reduce the maximum retail price (MRP) of products in accordance with the Goods and Service Tax (GST) cut and pass on the benefits to consumers. This announcement comes after many complaints from consumers that companies are not passing on the GST rate cut.

GST rate cut

The announcement came in the form of a letter issued by CBEC’s chairperson Vanaja Sarna to all Fast Moving Consumer Goods (FMCG) companies. The announcement asks companies to reduce the price of products for which tax reductions have been declared by the government. Moreover, it also requests companies to provide wide publicity about the revised MRP of various products.

According to the chairperson, GST rates were decreased mainly to increase investment and domestic demand in the country. If the benefits are not passed to customers, the overall benefit of the tax cut will be minimal. Chairperson Sarna asked companies to comply with the earlier appeal issued by the finance ministry.

Following the announcement of GST rate cut, many consumers took to social media to point out the prices of various products that remain unchanged after the tax cut. Many companies are accused of not passing on the GST benefits to customers. It has been alleged that many companies have hiked the base price of products in order to match the original GST prices.

Following the appeal from various sides, the GST Council reduced the tax rate of various products from the highest 28% to 18%. These goods include detergents, shampoo, beauty products, furniture, sanitary ware, etc. With this rate cut, there are only about 50 luxury items left in the highest 28% tax slab. One of the highlights of this tax cut is that the tax rate of all standalone restaurants have been lowered to a flat 5% (both AC and non-AC).

The government has also established a GST anti-profiteering authority to ensure that the benefits of GST are rightly passed on to the consumer. The authority is expected to look into consumer complaints on violations by companies not passing on the GST rate cut.


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