India's indirect tax administering authority has asked companies to reduce prices of products on which the Goods and Services Tax Council cut rates on Nov. 10 to pass on the benefit to consumers.
Vanaja Sarna, chairperson of the Central Board of Excise and Customs, in a Nov. 15 letter to India's top 100 industrialists, asked companies to join hands with the government and lower prices. “The reduction in GST rates is expected to encourage domestic demand and investment,” the letter said. It's important to ensure that reduced rates result in lower consumer prices or the maximum retail price, the CBEC chair said. BloombergQuint has reviewed the letter.
GST Council lowered rates on more than 200 items, including 178 that were shifted from the highest tax slab of 28 percent to 18 percent.
Also Read: The List Of Over 200 Items Now Taxed At Lower Rates Under GST
Sarna also asked restaurant chains and packaged foods companies such as MTR Foods to pass on the benefit of reduced GST rates to customers, an official told BloombergQuint on the condition of anonymity. The tax rate on all standalone restaurants was lowered from 18 percent and 12 percent to 5 percent, while input tax credit was scrapped.
Big chains have increased prices to keep rates stable, the official said. Small restaurants are expected to pass on the benefit to customers, the official said.
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