In a bonanza to consumers, the GST Council, comprising the Centre and States, has decided to reduce tax rates on goods and services from September 22, the first day of Navaratri.
Prices of kitchen staples to electronics, from medicines and equipment to automobiles, were supposed to get cheaper from Monday as the reduced Goods and Services Tax (GST) rates on about 375 items come into effect. About 99 percent of goods under the 12 percent GST slab have been moved to 5 percent, while the rejig has also resulted in 90 percent of items under the 28 percent tax slab coming down to the 18 percent bracket.
As the government has announced GST rate cuts on various items to make them more affordable, making sure that these tax cuts actually benefit the common people is a big challenge. This issue is perplexing, and the people at the helm are also in a state of tizzy about finding ways to ensure that the benefits of this tax cut reach customers. Things are not that simple, because the implementation part is quite complex and requires the government’s round-the-clock monitoring. There is a chance of businesses not passing on the reduced prices to customers, and the savings staying with the sellers.
In this context, reportedly, Consumer Affairs Secretary Nidhi Khare has issued a stern warning to companies that fail to pass on the benefits of revised Goods and Services Tax (GST) rates to consumers, stating that they will face strict action. She has made it clear that if the reduced GST is not passed on, it will be treated as an ‘unfair practice.’
Though on one side the Consumer Affairs Secretary has maintained that the government has a built-in system to monitor compliance and ensure that violations are addressed quickly, on the other, she has acknowledged that many products are already in the supply chain and re-stickering them might not be possible. Here lies the impracticability of this transition, because the government has confirmed that it expects sellers of the aforementioned goods to voluntarily inform the customers of the revised GST rates. This is the problematic part, because items which the sellers had bought at higher rates need to be sold at lower prices, which could stop them from following the guideline of telling their customer the truth of slashing of prices.
Hoping GST benefits will automatically reach consumers without proper enforcement is like pigeons expecting safety while closing their eyes. Ignoring the problem doesn’t make it go away rather the people running the affairs of the government should find a more practicable solution to ensure that every dime meant for the customers reaches the right pocket, and no one can do any kind of hanky-panky in this whole gamut.
