Companies, including FMCG firms, might be prosecuted if their retailers do not immediately cut the prices of products whose goods and services tax (GST) rates have been slashed.
Union Finance Secretary Hasmukh Adhia said the retailers or the companies cannot continue with higher prices on grounds that the old stocks have not been exhausted.
“We have made provisions for the companies to claim the difference from the government as input tax credit. But I am not willing to accept their argument to postpone passing on the benefits to consumers till they have disposed of their old stocks.”
According to him, the new prices should be effective from November 15.
The GST Council in its last meeting this month cut the tax rate on 176 items from 28 per cent to 18 per cent and on two to 12 per cent.
“We cannot track each retailer. So we have made it clear to manufacturers like FMCG companies that the onus is on them to ensure the retailers immediately pass on the benefits to the consumers if they want to escape action under the anti-profiteering clause of the GST.”
He added that the ministry of consumer affairs given manufacturers the elbow-room to alter their maximum retail prices till December.
“But this does not mean they can wait till December. The new prices have to become effective immediately.”
Speaking about the larger adverse impact of GST rates on the Centre’s tax collection, Adhia said he was confident that the numbers would hold up for the Budget. Referring to the upgrade of India’s sovereign rating by Moody’s, which has endorsed its fiscal marksmanship, he said it would be necessary to watch the trends in the three GST taxes — the integrated goods and services tax, state goods and services tax, and central goods and services tax — till the end of December to make a call. “I am confident we shall do well.”