FMCG companies seek GST rate cut to help revive consumption

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Fast-moving consumer goods (FMCG) companies have requested the government to consider slashing the goods and services (GST) rate for food, personal hygiene, and Ayurvedic products to rev up demand. The recommendation comes even as consumer spending wilts under the pandemic, driven by shrinking income and widespread unemployment.

In a representation, companies including Dabur and Parle Products have said that there is a need to restructure the GST rates to spur demand. “For instance, the GST rate for Ayurveda products needs to be reduced to five percent from the existing 12 percent. This would address the issue of affordability and accessibility as there has been an increased consumer interest in these products that are believed to help boost immunity,” said Mohit Malhotra, chief executive, Dabur.

Similarly, Ayurveda pioneers like Baidyanath also said that a uniform GST of five percent for classical as well as branded over-the-counter products should be envisaged to help push sales. Biscuit maker Parle Products also highlighted that it was unfair to club both categories of biscuits below Rs 100 and above Rs 100 under one category, subject to a uniform GST rate of as high as 18 percent.

“We have never asked for any reduction in GST on premium products. The mass category, typically the Rs 5 pack, which is below Rs 100 per kg needs to be taxed at a lower rate. It is also an essential item. We are hopeful that the government will consider that,” Mayank Shah, category head, Parle Products, said. The GST Council is expected to meet in the second week of June. Currently, products including chocolate, toothpaste, shampoo, and detergent are taxed at 18 percent.

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