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FMCG companies under scanner of GST authorities - GST Station

FMCG companies under scanner of GST authorities

FMCG companies under scanner of GST authorities

    Notices have already been sent to some of the leading FMCG companies, after NAA received complaints from consumers.

    Just ahead of the festival season, the National Anti-profiteering Authority (NAA) is keeping a close watch on several fast-moving consumer goods (FMCG) and consumer durable companies to check possible price manipulation, with an eye on evading passing on of GST benefits to consumers.

    The NAA officials are planning to issue notices in the coming days to companies on complaints from consumers that GST rate cuts made earlier are not being passed on. It has already sent out a number of such notices. 

    “Notices have already been sent to some of the leading FMCG companies, after NAA received complaints from consumers. We are also in the process of sending out notices to some more top lifestyle stores, one hospital chain and some consumer durable brands,” said an NAA official. Sources said that notices have already been sent to Hindustan Unilever, Nestle and Procter & Gamble, among others, for not passing on the GST benefits.

    Officials claim that in many cases, the primary investigation revealed that companies have either not reduced the price or have immediately increased it after decreasing it post-GST cut.

    “In many cases, companies have not passed on the benefits. We also have complaints where companies and brands have increased the price within one month of reducing it. Also, sometimes they first increase the price ahead of a cut and then reduce it,” the official added.

    Meanwhile, companies cry foul as the provision that mandates immediate price reduction of goods and services commensurate with the GST cut, does not specify a sunset clause.

    “This is like price controls, which will not augur well for the industry, in the face of a slowdown. Prices are driven by market forces. Also, there is no clarity over how long a company cannot increase price. This needs to be cleared,” a senior official from Nestle, who did not wish to be named, told TMS.

    “There is still an ambiguity on whether the increase in margin for some products would be acceptable for the authorities as justification for a price increase. Separately, the industry has also been looking forward to detailed guidelines on calculating the amount of benefit to be passed on and in specific, the duration for which the reduced price is to be continued,” according to Ernst & Young tax partner Abhishek Jain.

    Source- New Indian Express.

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