Are manufacturers gaming GST 2.0? Smaller packages, bogus product updates under lens

The Central government is monitoring companies to see whether they are passing on the Goods and Services Tax (GST) reform benefits to the masses. The Consumer Affairs Ministry is planning to monitor complaints about price manipulation using tactics like bringing new models by increasing the prices, changing minor features, and retiring old models.

As of now, there is no anti-profiteering body. Hence, the consumer affairs ministry will focus on complaints linked to price manipulation by businesses on the pretext of upgrading the prices, reported Mint.

India's packaged food companies are thinking about adding more volume to retain their rounded-off prices, like Rs 1, Rs 5, and Rs 10. Severalcompanies have passed on the GST benefit to consumers by lowering prices.

HUL, India’s largest packaged consumer goods company, said it is providing benefits by increasing the weight or volume rather than cutting prices of small packs.

"For price-point packs, we’ve opted to increase weight or volume as applicable to avoid odd pricing and coinage-related challenges, which will ensure pricing simplicity," a company spokesperson said in response to a query from Mint.

The spokesperson said that consumers will receive more products at the same price, which can be construed as lowering the prices of items.

Rishabh Jain, chief financial officer, Bikaji Foods International Ltd, told Mint that the companies can add more grammage to their packs to pass on the GST benefit.

Coca-Cola said the companyhas reduced prices on bottled water and its juice portfolio.

The newspaper reported that the ministry is scrutinizingall categories of products, including vehicles, toys, fast-moving consumer goods, etc.

What is the ministry doing?

The ministry has already created a dedicated GST category on its Integrated Grievance Redressal Mechanism (INGRAM) portal for complaints. It has also asked the National Consumer Helpline to track complaints. These complaints will be forwarded to the department for further action.

“Companies are duty-bound to pass on the benefits of GST rate cuts to consumers, and any attempt to manipulate prices in the name of adding new features will be investigated by the concerned technical bodies of the department to verify their claims," an official told the newspaper.