Post tax rate cut, FMCG firms set to reduce prices 

downloadPrices of shampoo, chocolates, nutrition drinks and condensed milk are set to drop 5-15% after the GST Council eased these from higher tax slabs. 

Companies such as Hindustan Unilever, Dabur, Amul, GlaxoSmithKline, Procter & Gamble, Nestle and Perfetti Van Melle said they have either decided to reduce prices or are planning to do so after the GST Council cut tax on several consumer goods to 18% from 28%. They, in fact, are also bound by the anti-profiteering clause under the GST law to pass on any benefit from lower tax incidence to consumers. 

“We will drop prices at least by 5% on our shampoo range,” Dabur chief executive Sunil Duggal said. The country’s largest dairy firm, Amul, said it would slash prices of condensed milk and chocolates by 5-10% with immediate effect, while GlaxoSmithKline Consumers said it would cut the price of popular chocolate drink Horlicks in line with the new rate. 

Hindustan Unilever said it was calibrating the Rin detergent to cut the prices of its skin creams and increase grammage of laundry brands by as early as next week. 

However, the companies may face impediments while passing on benefits to consumers, as some retailers have threatened they would not slash prices unless producers protected their margins and took back old stock before they implemented price cuts, said industry executives. 

Negotiations between the FMCG majors and the retailers have already begun and will take at least a week to reach a conclusion, they said. Tax experts said the companies must settle these issues at the earliest as the law makes it compulsory for them to pass on the benefits. 

Source: Economic Times

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