Good News! GST Won’t Affect Your Grocery Shopping

Most households, groceries and personal care items will not burn your pocket for around 6 to 8 weeks after the GST rolls out on July 1 as companies don’t know how the new tax will affect their operation costs.

Several household products like toothpastes, cookies, hair oils, and soaps will be taxed at 18% instead of 22% in the current excise duty as well as VAT. However, the shampoos, detergents, and skincare products will be charged at 28% tax.

Vivek Gambhir, Managing Director, Godrej Consumer added, “Though we wanted to pass on the lower GST benefits in the relevant categories where rates come down to the users so it can be feasible, there are still some issues opened where we need clarity, such as the way area-based exemptions are handled which will impact the decisions on pricing. No price hike is planned in categories where GST rates will rise.”

According to the distributors and retailers, the price tags on the products by Marico, Hindustan Unilever, Dabur, Procter & Gamble, Colgate and Britannia will be the same until August.  There are generally no charges in either grammage or price for the new stock which will come to the market from next week. HUL doesn’t have any comment on changing prices.

In the GST run-up, various retailers and companies have been either planning to bill limited stocks over the past few days or halting supplies, when companies push more and more products as well as primary shipments to meet the sales targets every three weeks.

While GST roll-out includes the clause of anti-profiteering asking companies to pass on the perks of lower taxes to the buyers, companies gauge the impact of tax credit on raw materials.

Mayank Shah, Parle Products added, “We are unable to change the ranges like Rs. 5 to Rs. 10. We could increase or reduce weight but it won’t be only on GST on end products. We need at least two months to see the impact of new tax on the cost of materials and what will be the credit to offset.”

Companies would like to avoid the reactions even though most have factories in clarity and excise-free zones on the GST application to goods that are made there. A lot of companies would like to avoid the confusion of having two ranges for the same product with various pre- and post- GST rates. When companies are ready to compensate for any loss of margins because of the difference, there will be unwanted paperwork.


No Hike in Dairy Prices

The most vital consumer segment in India, milk and curd are exempted from new tax regime, according to market leader Amul. RS Sodhi, MD, Gujarat Cooperative Milk Marketing Federation, “We will drop milk powder prices as well as baby food prices to 5%. But new prices will be effective just after 10 days once the current inventory is exhausted.”

Despite the competition between organized trade and leading consumer giants over the margins past week, the largest retailer in the nation, Future Group, added it will introduce the GST Mahurat shopping with the beginning of July 1.

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