1 in 3 consumers are benefitting from the GST rate cuts more than before on account of businesses and traders passing on the reduced prices to them, an online survey has found.
The study by Local circles which is an online community of consumers that surveyed 16,000 people has revealed a stable progression in buyer experience between June 2018 and April 2019 on getting the tax cut benefits from the GST rate cuts announced by the government.
The tax cuts were made with the intention to serve the interests of consumers with reduced prices of essential commodities as well as lower bills at restaurants. The survey also suggests a further moderation in the prices of household items.
The 3 big GST rate cuts were implemented by the government in Nov 17, July 18 and recently in Jan 19. The survey marks an increasing compliance by brands as against the general customer impression regarding the alleged profiteering by companies which in the past had not decreased the prices in keeping with the tax cuts.
The study said 30% consumers in April 2019 believed that brands are passing the GST tax reduction benefits to them on items like cosmetics, shampoo and groceries, up from 15% in June 2018 and 27% in Jan 2019. While, this is a marked improvement from the past year, 45% people in April 2019 still think otherwise as the base price of products has been increased.
The government had reduced the GST rates on many items like shampoo, cosmetics and groceries etc. from 28% to 18% in Nov 2017.
Meanwhile, showing some improvement, 34% people in April 2019 believe that restaurants are passing on the GST tax reduction benefits to them as compared to 28% in June 2018. Whilst, 47% in April 2019 still feel that the restaurants are not transferring the reduced prices to them as against 57% in June 2018. The government had reduced GST on the restaurant bills from 18% to 5% in Nov 2017 with withdrawal of the Input Tax Credit (ITC) for restaurants.
The survey also stated that 29% consumers in April 2019 think that brands are passing the July 2018 GST tax reduction benefits to them on home appliances, paints and televisions as against 20% in October 2018. Meanwhile, 40% (in April) respondents still feel vice versa compared to 47% in Oct 2018. The GST Council had in July 2018 cut tax rates on the above items from 28% to 18%.
Although the survey suggests an improved consumer belief, there still is a larger section that believes that the GST tax cuts have not fully trickled down to the end user. However, the positive trend is expected to bring the household cost of the consumers down in the longer run.