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Nov 13, 2017 12:51 PM IST | Source: Moneycontrol.com

GST tax rate cut: FMCG companies will soon reduce prices

The 23rd GST Council Meeting on Friday revised the rates of the earlier 28-percent levied 178 items to 5-15 percent.

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The fast moving consumer good (FMCG) companies are all set to cut tax rate by 5-15 percent as per the revised Goods & Services Tax (GST) rates, reports the Economic Times.

The 23rd GST Council Meeting on Friday revised the rates of the earlier 28-percent levied 178 items to 5-15 percent.

Major companies — Hindustan UnileverDabur, Amul, GlaxoSmithKline, Procter & GambleNestle and Perfetti Van Melle — told the paper that either they will reduce the prices of the products now or they will do so after the next tax cut by the Council on the other consumer goods under 28 percent tax slab.

Dabur CEO Sunil Duggal confirmed that they will drop their shampoo prices by 5 percent. Amul is another company which will slash its condensed milk and chocolates prices by 5-10 percent with immediate effect.

GlaxoSmithKline Consumers also said they will bring the price of their brand, Horlicks, in line with the revised rates.

Hindustan Unilever plans to adjust the price of their detergent Rin to be able to cut the prices of their skin cream products.

Despite the revised rates, the firms may face difficulties while passing on the benefits to the consumers. According to the report, this is because some retailers are not willing to cut prices unless the producers protect the retailers' margins and take back the old stock before implementing price cuts.

The negotiations between the FMCG majors and retailers have already begun and it will take at least a week to reach a consensus, industry executives told the paper.

Companies, along with tax experts, have pointed the hurdle to lower prices and said they were working on the solutions. Sooner or later, because of the anti-profiteering norms, the industry will be required to pass on the revised rates' benefit to the consumers.

Nestle India spokesperson told ET that "there will be a transition time before new price stocks are available in the market", but will definitely reduce the prices and pass on the benefit to the consumers.

Patanjali spokesperson pointed that the firm is already in the process of reducing the prices. However, since there are multiple channels and processes to be taken care of, it will take some time.

tags #Economy #GST

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