GST 2.0: Are consumers getting the full benefits of rate cut? Here's what survey shows

Two weeks after the rollout of the revamped Goods and Services Tax (GST 2.0) regime, which reduced rates on about 80 goods and services, consumers are beginning to see the benefits, particularly in packaged foods and medicines, according to a survey.

However, the pass-through remains uneven across sectors.

“While there has been some improvement in the processed packaged food and medicines, there appears to have been some slide in the case of white goods, appliances and consumer electronics and vehicles,” citizen engagement platform LocalCircles said.

The new GST structure has two slabs of 5% and 18%, instead of the earlier four slabs of 5, 12, 18, and 28%.

According to the survey, 40% of consumers confirmed receiving the full benefit of GST rate reduction on packaged food products in the second week, up sharply from the first week when only 10% had reported the same.

Another 18% said they received a partial benefit, an 80% increase in those who gained from the revised tax rates.

On medicines, 16% of respondents said they got the full benefit of the lower tax rate, while 44% reported partial benefits. This represents a 76% improvement in consumers receiving at least some benefit compared with the first week after GST 2.0 implementation, LocalCircles said.

For appliances, white goods and consumer electronics, however, the trend reversed.

Only 23% of respondents said they received full benefit, and 34% got partial benefit, a 15% decline from the previous week. The report attributed this to possible lack of transparency in pricing or reluctance among retailers to reduce prices without brand compensation.

In the automobile segment, 55% of consumers reported receiving the full benefit of GST rate reduction on vehicles, and 21% got a partial benefit. LocalCircles said some dealers, especially in the two-wheeler segment, were offering freebies instead of lowering ex-showroom prices to reflect GST cuts.

The findings come amid growing consumer concerns that the benefits of the simplified GST structure are not being fully passed on.

The survey received over 74,000 responses from consumers across 341 districts in India. Of these, 64% were men and 36% women. About 41% respondents were from Tier 1 cities, 29% from Tier 2, and 30% from Tier 3, 4, 5 and rural districts.

LocalCircles said it will share the report with the government and urge authorities to ensure that manufacturers, distributors and retailers pass on the benefits of GST rate reductions to consumers without delay.

“It is also clear that government will have to more proactively engage with FMCG and medicine brands to ensure that they and their distributors and stockists incentivise the retailers in ensuring that the customer receives the GST reduction benefit on immediate basis,” it said.

GST 2.0 grievances

The National Consumer Helpline (NCH) has received 3,981 calls related to the recently implemented GST 2.0 reforms, the Ministry of Consumer Affairs said last week.

A major share of complaints pertained to milk prices, followed by electronic goods, domestic LPG and petrol.

The Central Consumer Protection Authority (CCPA), which is reviewing the grievances, said several complaints were based on misperceptions about GST rates.