A day after Central Board of Excise and Customs (CBEC) chairperson Vanaja Sarna wrote to FMCG companies to follow the revised MRP rate list as per the recent tax reduction, FMCG companies, including ITC, Dabur, HUL and Marico, on Tuesday agreed to slash the prices of various products to pass on the benefits of the GST rate cut to end-consumers. Earlier, Dabur had said that the fresh production, which would hit the market next month, would also have the revised Maximum Retail Price (MRP). Analysts say with the increasing pressure from the government, more companies may fall in line soon.
The Goods and Services Tax (GST) rate was reduced on 178 items, including detergents, shampoos and beauty products, from 28 per cent to 18 per cent from November 15.
"ITC has modified the price of its relevant products keeping in mind the applicable rates under the recent GST notification," a company spokesperson told PTI. Similarly, an HUL spokesperson said: "We have reduced price for Bru Gold coffee from Rs 145 to Rs 111 on a 50 gm pack. Any further price changes will be communicated in due course." HUL remains committed to passing on the benefits of GST reduction to the consumers, the spokesperson added.
Likewise, Marico CFO Vivek Karve said the company has effected MRP reductions on products across categories such as deodorants, hair gels, hair creams, body care etc. "While the new production shifts to new reduced MRP immediately, we are passing on the benefits on existing stocks either through stickering the products with reduced MRP or by providing additional discounts to our trade channel partners," he said. Karve further said the company has also sent out communication to its partners to pass on the benefit of reduced taxes to the consumers.
The company said it had also revised the MRP of fresh production with immediate effect which will hit the shelves by next month. When contacted, a Patanjali spokesperson said: "We welcome this step and the benefits must be transferred to the customers. We are evaluating over the quantum of decrease."
On Monday, CBEC Chairperson Vanaja Sarna in a letter to all major FMCG companies had pointed out the need to immediately revise the MRP on all the products for which the tax reductions have been announced by the GST Council.
GST rates on a number of items have also been reduced from 18 per cent to 12 per cent and from 12 per cent to 5 per cent. Items on which tax rate has been cut from 28 per cent to 18 per cent include chewing gum, chocolates, coffee, custard powder, dental hygiene products, creams, after-shave, deodorant, detergent and washing power, razors and blades, cutlery, batteries, goggles, wrist watches and mattress. Tax rate on condensed mil, refined sugar, pasta curry paste, diabetic food, and bamboo/cane furniture has been cut from 18 per cent to 12 per cent.
With PTI inputs