Govt pulls up e-commerce players for not reducing prices after GST cuts

"We are constantly monitoring the price levels, as we wish to ensure the price cut benefits are passed on to the consumers," said an official

The government has sought responses from some big e-commerce players for raising prices of a few items even after GST cuts came into effect, sources have told Moneycontrol.

The new goods and services tax regime, which kicked in on September 22, replaces the previous multi-tier structure with two main slabs of 5 percent and 18 percent. The biggest overhaul of the indirect tax is aimed at lowering prices and reduce the tax burden.

"An e-commerce major advertised higher prices post GST rate cuts…citing a technical glitch but the prices were corrected later," one of the sources said.

Moneycontrol reported on September 26 that prices of more than 50 products are under review by the government. "We await inputs by the end of the month on prices of over 50 items which are being monitored by field formations across India," an official had said.

The government spoke to some major e-commerce companies in recent days, making its displeasure known, sources said.

"However, we are constantly monitoring the price levels, as we wish to ensure the price cut benefits are passed on to the consumers," the source added.

Different ministries are monitoring price changes across sectors to curb profiteering, the source said.

Moneycontrol reached out to the Flipkart and Amazon for comments.

In an official statement to Moneycontrol, Flipkart said that it has taken several communication and tech enhancement measures to ensure that the GST reductions are passed on to customers, by sensitizing seller partners and providing a simplified seller dashboard with automatic back-end updates of the new GST slabs, thereby making it easier for them to adopt the changes.

"We have also been promoting the price benefits through a dedicated storefront initiative called 'GST Bachat Utsav', which highlights tax-linked savings for customers. Through these steps, Flipkart is actively working with its sellers to ensure that the benefits of the GST reductions are effectively translated into lower consumer prices," Flipkart said.

Amazon, however, has not yet responded.

The government expects the impact of rate cuts to be more visible during the ongoing festival season, when consumer purchases typically peak.

Reforms of this scale take time to fully stabilise, and enforcement measures will only be considered once sufficient evidence from field reports is available, officials said.

On September 29, consumer affairs secretary Nidhi Khare said the department received more than 3,000 complaints of companies failing to pass on the benefits of lower GST to consumers.

In an interview to Moneycontrol on September 19, Sanjeev Sanyal, a member of the economic advisory council to the prime minister, said the government has signalled that the industry should pass through the GST cut benefits on to the retail prices but does not want to create another "inspector raj" to enforce it.

"We’re constantly receiving complaints over non-pass through of prices, so we maintain strong vigil, and communicating with companies," another official said.