Following 3 weeks post GST 2.0, 75 per cent consumers reported that they got full or partial benefit on vehicles, while the percentage remained at 65 for appliances, white goods and consumer electronics, according to a survey by Local Circles. Challenges persist in packaged food products and medicines segment where only 54 per cent consumers, who were being surveyed, confirmed receiving full or partial benefits of GST rate reduction.
The survey revealed that large number of consumers are still waiting to see the promised relief in packaged foods and medicines.
LocalCircles, which has been closely tracking consumers’ reaction to the implementation of the new GST rates, found improvement in GST rate implementation on packaged foods and medicines during Week 2, likely because of Government enforcement and products with revised MRPs reached retailers. However, there was still a marked difference between these two categories and categories like whitegoods and automobiles.
The survey received over 79,000 responses from consumers located in 347 districts of India. 69% respondents were men while 31% respondents were women. 44% respondents were from tier 1, 29% from tier 2 and 27% respondents were from tier 3, 4, 5 and rural districts.
Reforms in Goods and Services Tax (GST), rationalizing tax slabs into 5% and 18% with a sin tax of 40%, came into effect from Sep 22.
Household products like hair oil, shampoo, toothpaste, toilet soaps, shaving cream and toothbrushes will now attract just 5% GST instead of 18%. Rates on butter, ghee, cheese, packaged namkeens, dairy spreads and utensils have been cut from 12% to 5%. Feeding bottles, clinical diapers and sewing machines too move into the lowest slab.
Health and life insurance premiums, earlier taxed at 18%, are now exempt. Medical-grade oxygen, diagnostic kits, glucometers, test strips, corrective spectacles and thermometers will all attract only 5%.
Petrol, diesel and CNG cars within specified categories, earlier at 28%, will now face only 18%. The same applies to three-wheelers, motorcycles up to 350cc and commercial vehicles for goods transport.
When compared to the first week, 80% increase has been observed in percentage of consumers who confirmed they got full or partial benefit of GST rate reduction on packaged food products in the second week.
In week 3, the percentage of consumers who confirmed getting full or partial benefit of GST rate reduction on medicines showed 10% drop. As against 60% of consumers who claimed to have received partial or full benefit in week 2, in the week under study 54% of consumers claimed to have received partial or full benefits. As against 28% who indicated not having received any benefit, in week 3 it rose to 35%. The survey shows that medicines sector continues to be the worst performing in passing GST 2.0 benefits.
In the automobile retail sector, there was a sharp surge in festive buying, with passenger vehicle sales rising 35% year-on-year (YoY) during the nine-day Navratri period (Sep 22-Oct 1 concluding with Dusshera on Oct 2), according to the Federation of Automobile Dealers Associations (FADA).
