The companies argue that consumers are used to buying these goods at a fixed price. If their prices are reduced to Rs 9 or Rs 18, it will create confusion among consumers and cause inconvenience in transactions.

GST Rate Cut: Consumer goods manufacturing companies (FMCG) have made it clear to tax officials that they will not cut prices on popular low-priced products. These include products like biscuits for Rs 5, soap for Rs 10 and toothpaste for Rs 20. Whereas the tax rate on these has been reduced, after which their prices should have come down.

FMCG companies are not ready to reduce prices

The companies argue that consumers are used to buying these goods at a fixed price. If their prices are reduced to Rs 9 or Rs 18, it will create confusion among consumers and cause inconvenience in transactions.

Instead, the companies have suggested to the Central Board of Indirect Taxes and Customs (CBIC) that they will keep the price as it is, but will increase the quantity in the packet. That is, now if a customer buys a biscuit worth Rs 20, he will get more quantity than before.

According to the report, executives of several big FMCG companies said that by providing more quantity at the same price, the benefit of reduced GST will reach consumers without any hassle.

Are companies ready to pass on the benefits?

Bikaji Foods CFO Rishabh Jain confirmed that the company will increase the weight of small packets so that consumers can get more value. Meanwhile, Dabur CEO Mohit Malhotra said that his company will also definitely pass on the benefits of GST reduction to consumers. He further said that the demand for every product is likely to increase due to lower tax.

However, Finance Ministry officials say that they are keeping a close eye on the whole matter. The report further states that the ministry is also considering issuing guidelines so that the benefits reach people in the true sense and not let such companies pocket the profits.