GST rate cut benefits fully passed on to consumers, government monitoring prices: Nirmala Sitharaman

NEW DELHI — Finance Minister Nirmala Sitharaman on Saturday said the government is monitoring the prices of 54 daily-use items and the benefits of GST rate cuts effective September 22 have been fully passed on to consumers in the form of reduced prices.

Addressing a press conference on 'GST Bachat Utsav', she also said in quite a few cases, a "more-than-expected" price reduction due to GST reforms has been passed on to end consumers.

"On these 54 items on which we have been getting inputs from the zonal areas... we are convinced that on every such items the benefits are being fully passed on to consumers," Sitharaman said in a joint conference with Commerce and Industry Minister Piyush Goyal and IT Minister Ashwini Vaishnaw.

Effective September 22, Goods and Services Tax (GST) have become a two-tier tax structure of 5 and 18 per cent, and a special 40 per cent rate for ultra-luxury items. Prior to this, GST was taxed at rates of 5, 12, 18, and 28 per cent, plus a compensation cess on luxury items.

This has resulted in slashing of prices of as many as 375 items ranging from toothpaste and shampoo to cars and television sets.

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Giving data on auto sales, Sitharaman said GST rate reduction has helped in increasing consumer purchases.

GST rates on small cars has been slashed to 18 per cent, while on large cars and SUVs the rate has been brought down to 40 per cent. Prior to GST rate cut, the total tax incidence on cars, depending on engine capacity and length, ranged from 29 per cent for small petrol cars to 50 per cent for SUVs.

Sharing data of price reduction post GST rate cut, Sitharaman said in items like shampoo, talcum powder, face powder, table, kitchenware, and utensils made of iron, steel and copper, besides toys, umbrellas -- all saw more-than-expected price reduction.

Sitharaman said except for Portland variety of cement of one or two brands, all cement companies have reduced prices. GST on cement, which is the largest input cost in construction activities, was cut from 28 per cent to 18 per cent.

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Sitharaman also said the Department of Consumer Affairs has received 3,169 complaints related to non-reduction in prices commensurate with GST cut. Of this, 3,075 complaints have been forwarded to nodal officers in the Central Board of Indirect Taxes and Customs (CBIC). Total 94 complaints have been resolved by the department.

The department will enable a functionality on the grievance reporting portal so that the complaints can be forwarded to the chief commissioners of the respective zones from where complaints have come in, the minister said.

In his Independence Day address, Prime Minister Narendra Modi had announced that the next-gen GST reforms, which included rate cuts and pruning of slabs, and removing inverted duty structure, would be implemented before Diwali. The GST Council, comprising Centre and states, decided to implement the reforms from September 22.

The reforms came into effect from the first day of Navratri -- September 22 and I feel the people of India have received it well, Sitharaman said.

Answering a question on opposition terming GST reforms a course correction, Sitharaman said the Modi government set the course for GST and implemented it.

"The Opposition neither brought GST nor even dared to attempt it. What we are doing today is not a correction, but a conscious decision - a reflection of cooperation between the Central government and the GST Council to pass on greater benefits to the people. During the Congress era, they didn't even attempt a course correction. They kept the income tax rate above 90 per cent," she said.

Talking about benefits of the recent cut in GST rates, Commerce & Industry Minister Piyush Goyal said as soon as the GST announcement came in, foreign investors quickly realised that this is a bonanza and demand will go up massively.

When asked if some e-commerce firms have not passed on the benefits of GST cut to consumers, the minister said that normally all companies have passed on the benefits and above that they have announced cash bonuses and discounts also.

"But if any site or platform has not passed on the benefits ...consumer affairs (department) can take action ...all industry and businesses have assured me that full benefit will be passed on to consumers," he added.

IT Minister Ashwini Vaishnaw said when GST reform was announced there were different estimates of rise in consumption. Last year, the GDP size was INR 335 lakh crore, of which INR 202 lakh crore was from consumption and INR 98 lakh crore from investment.

Because of GST reforms consumption will be significantly increasing and quite likely that the consumption will increase more than 10 per cent this year, which means there is possibility of about INR 20 lakh crore extra consumption this fiscal compared to last fiscal.