GST Anti-Profiteering Probe: Procter & Gamble Made Rs 250 Crore In Undue Profit

The government’s GST probe body has charged Procter & Gamble Co. with undue profiteering to the extent of Rs 250 crore by not passing benefit of tax rate cut to consumers, according to a person familiar with the development.

The Directorate General of Anti-Profiteering has submitted a report to National Anti-Profiteering Authority, which has already started hearing the case, a senior government official told BloombergQuint. The official requested anonymity as he isn’t authorised to speak to the media.

According to the official, the consumer goods company hasn’t passed benefits of lower tax on products like detergents and shampoo on which goods and services tax was reduced from 28 percent to 18 percent in November 2017.

A spokesperson for P&G—the maker of Tide detergent and Head and Shoulders shampoo—told BloombergQuint in response to emailed queries that they have passed the net benefit of GST rate reduction and communicated the same via advertising in mass media to help increase awareness with the consumers, shoppers and retailers. DNA newspaper was the first to report about the profiteering.

Sanitary Pad Unit Under Lens

The directorate is also investigating the consumer goods major’s sanitary napkin business for possible tax evasion, the official said, adding that it has sought documents based on a complaint filed by a consumer and is investigating.

In July 2018, the GST Council had exempted sanitary napkins from the indirect tax, on which 12 percent GST was earlier levied.

“We will continue to cooperate with the authorities in this matter and provide clarifications,” the P&G spokesperson said. “We hope that the authorities concerned will appreciate the procedure followed to pass on the GST benefit and will take a just view of the matter.”