From toothbrushes to erasers to cheese to televisions, 30 out of the 53 items monitored by the Ministry of Finance have seen full or greater pass-through of reductions in Goods and Services Tax (GST) in the form of lower prices for consumers since September 22, government sources said on October 18.
The 54th item i.e. butter has seen a greater pass-through of GST benefits to consumers in the lower-end category. However, the cost of the higher-end category has yet to reflect the tax cuts entirely, data shared by government sources showed.
This means, based on reduction of the GST rate and assuming that all other cost and profit remain constant, the price drop for butter was expected in the range of 6.25 percent and 11.02 percent. However, the actual decrease in price, according to average data from various zones, stands at 6.47 percent.
Similarly, while cement has seen greater passage of rate cuts by dropping prices by 7.97 percent versus the expected figure of 7.81 percent, Finance Minister Nirmala Sitharaman pointed out that the higher category products has not yet passed on the benefit as per expectations.
Toothbrush has seen the highest pass through of the GST rate cut with prices dropping by nearly 5 percent more compared to the expected figure of 6.25 percent, followed by dried fruits and clinical diapers.
Air conditioners, television sets, jam, tomato ketchup, shampoo, face powder are some of the other items that have seen prices drop more than expected following a reduction in their GST rates.
Among dairy items, the situation is a mixed bag: while the price of cheese has dropped by 1.7 percent more than the expected decrease of 6.25 percent, the retail price of ghee has fallen 0.3 percent less than the anticipated 6.25 percent reduction based on the GST rate cut.
Ultra-high temperature milk has also seen prices drop 0.7 percent less than expected based on the rate cut offered on GST.
Some of the lowest pass-through of GST cuts has been observed in stationery items such as pencils and exercise books, with retail prices falling 2.7 percent and 3.2 percent less than expected, respectively.
Crayons and pencil sharpeners too have seen prices drop lower than expected.
The lowest pass-through among the 54 items monitored by the finance ministry was seen in thermometers, with prices dropping 3.6 percent less than anticipated in line with the reduction in the GST rate.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
