Ushering in Navratri, the nine days of festivity and new beginnings, 22 September will also mark a reset in household budgets, as consumption tax rate cuts will make everyday goods—from butter and paneer to hair oil and toothpaste—more affordable.
Earlier this month, the government moved to rationalize the goods and services tax (GST) rates in the country. From 22 September, the old 12% and 28% rates will be merged into 5% and 18%, with nil/exempt still in place. A new 40% slab has been added just for luxury and ‘sin’ goods such as tobacco, sweet aerated drinks and top-end cars.
While the transition to the new tax slabs will take a fortnight for the new price tags to fully reach store shelves, companies said the benefit to consumers will begin immediately, aligning festive cheer with lower bills.
Companies are running large-scale campaigns to spread awareness about the new, reduced prices. However, since they are still transitioning to the revised rates, consumers may find some products at the old GST rates but can ask retailers for the revised rates starting Monday, manufacturers said.
India’s largest dairy cooperative, Amul, has revised prices across more than 700 products, offering the full benefit of the GST reduction to its customers from 22 September. The list includes products such as butter, ghee, UHT milk, ice cream, cheese, paneer, chocolates, bakery items, frozen dairy and potato snacks, condensed milk, peanut spread, malt-based drinks, etc.
“New production has started with the new price; however, consumers will start getting the benefit of new prices starting tomorrow (22 September). Given the size of our country, the inventory in the market, and the market share we have across categories, stocks with revised MRPs will take some time to reach the market,” managing director, Gujarat Co-operative Milk Marketing Federation Ltd (Amul) told Mint.
Depending on the product and grammage, Amul has cut prices by up to ₹200. It has already communicated the changes to its trade partners, including distributors, Amul parlours, and retailers across India.
He said Amul has deployed QR codes in stores, along with media campaigns, to inform consumers about new prices. “Trade teams, distributors, everyone has been aligned to this change. New production has already started, but the lead time can differ across products. Within the next 15 days to a month, 90% of the transition will be complete,” he said.
In Delhi’s Sarita Vihar area, shop owner of Vikas Morning Store said that billing from some large companies has been temporarily halted. “All fresh billing will happen tomorrow. We are waiting for the revised prices. Companies have been in touch regarding the new price list,” he said.
ITC Ltd has already announced it will pass on the benefits of GST rate rationalization to consumers, including price cuts across its food categories, on Day-1.
“We are also informing all our trade partners about the ensuing changes. During the transition period, physical products bearing both the old and new MRPs may be available in the market,” Hemant Malik, executive director of ITC, said. “Consumers should refer to the updated MRP before making any purchase. We expect that the timely and holistic GST reforms by the government will boost consumption of key food products before the festive season.”
The government’s decision to revamp GST will lead to lower tax rates across a range of daily-use items. Hair oil, shampoo, toothpaste, toilet soap bars, toothbrushes, and shaving cream will now attract 5% GST, down from 18% earlier. Similarly, the tax rate on butter, ghee, cheese, dairy spreads, pre-packaged namkeens, bhujia, and mixtures will fall from 12% to 5%.
The phase of transition to the new rate structure has been challenging for most packaged consumer goods companies, which deal with thousands of stock-keeping units. Industry bodies had urged for simpler rules to ease the transition to the revised rate.
In a notification on 18 September, the department of consumer affairs eased the compliance burden for companies, allowing “voluntary” use of revised price stickers on goods and waiving the earlier requirement to publish revised prices in two newspapers.
Packaged goods company Dabur took to local and national newspapers to inform consumers about lower prices. For instance, the company said it has slashed the price of amla hair oil from ₹235 to ₹207 for a 450 ml bottle; a 200-gram pack of Dabur Red toothpaste will sell for Rs 135, down from Rs155, while a 1-litre pack of Real juice will now come for Rs 122, as against Rs 130 earlier. These prices will come into effect on 22 September.
Over the weekend, large e-commerce platforms hosted sales offering GST-linked benefits on a variety of goods. Online fashion retailer Myntra, currently running its festive season sale, used the tagline “GST benefit included” to promote lower prices on select items.
Meanwhile, the All India Consumer Products Distributors Federation (AICPDF) said almost all existing stock in the market has been aligned with the revised tax structure.
“Retailers are already offering reduced rates across product categories, ensuring that consumers enjoy immediate benefits of GST 2.0 without disruption. Over the last 10 days, almost all existing stocks in the market have been aligned with the revised tax structure through special trade discounts and QPS (quantity per store) schemes offered by FMCG companies,” it said.
FMCG companies have assured that the full benefit of the GST reduction will be passed on to consumers transparently and without compromise by the time stocks with new MRP reach retail shelves in the coming days, said Dhairyashil Patil, national president of the distributors body.
