Three weeks after the rollout of the revised goods and services tax (GST) rates, even as most consumers continue to see price relief on automobiles and household appliances, many are still struggling to benefit from lower tax rates on medicines and packaged foods, according to a new survey by LocalCircles released on Tuesday.
“While more consumers are getting the benefits of GST 2.0 reforms, in some sectors like processed foods and medicines much more action is required by the brands, their supply chain and the last mile retailers,” LocalCircles noted.
The reforms, popularly known as GST 2.0, which kicked in September 22, re-organised GST slabs into just two, with rates fixed at 5 and 18 per cent for a wide range of goods, including packaged foods, medicines, consumer electronics, and automobiles. Only a handful of luxury and so-called sin goods continue to be taxed at higher rates.
Packaged food, medicines key concerns
Under the new GST rates, tax on many packaged food items such as butter, ghee, cheese & dairy spreads, and savoury mixtures was reduced from 12 per cent to 5 per cent. Similarly, GST rates on many healthcare items, including 36 essential medicines, were also capped at 5 per cent.
However, consumers surveyed by LocalCircles claim they are yet to see the benefits of the rate cuts, with only 22 per cent saying that they received the full benefit on packaged food products in the third week (October 6-13). Another 32 per cent reported only partially receiving benefits.
The pharmaceuticals category continued to be the worst-performing, with just 27 per cent of consumers confirming that they received the full benefit of lower GST on medicines, while another 27 per cent saying they received only partial benefit.
White goods and vehicles lead the way
In contrast to food and drugs, most benefits appear to have been in categories such as vehicles and white goods (large household electrical goods such as a refrigerator, washing machine, etc). Among consumers who purchased appliances, electronics, and other white goods, 33 per cent said they received full GST relief while 32 per cent said they received partial relief.
For vehicle purchases, 52 per cent of consumers reported receiving the full benefit of the lower tax rate, while 24 per cent said they got a partial benefit. Overall, 75 per cent of respondents confirmed that they benefited from the rate reduction when buying vehicles, the survey added.
The Federation of Automobile Dealers Associations (Fada) also reported a 35 per cent year-on-year (Y-o-Y) rise in passenger vehicle sales during the Navratri festival period, reflecting a surge in festive demand following the tax cuts.
The survey gathered over 79,000 responses from 347 districts across India, with 69 per cent men and 31 per cent women. The sampled cohort comprised 44 per cent from Tier-1, 29 per cent from tier-2, and 27 per cent from tier-3, 4, 5, and rural areas.
