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GST rate cut not benefiting citizens; 15,000 cases of MRP violations booked

Even a month after the Centre slashed GST rates on 212 items, the entire benefit is yet to reach consumers. Legal metrology sleuths have booked over 15,000 cases of MRP violations across India, with restaurants figuring among the top violators. The fast moving consumer goods (FMCG) sector, especially bottled mineral water and aerated drinks, is found to be most vulnerable to illegal trade practices. "Cases of MRP violations and anti-profiteering are being registered across the country and we are compiling a report based on inputs from individual states. It'll be submitted to the Parliament on December 15," said B N Dixit, director of the department of consumer affairs, Government of India. Dixit said a few sectors were compliant with the antiprofiteering clause of the GST law and were promptly passing the benefit of lower prices to consumers. Many sectors were still selling goods at older prices, he added. The GST Council had on November 15 reduced tax rates and moved 177 items from the highest slab (28%) to 18% and lower brackets. The Centre had also set up an anti-profiteering authority to monitor compliance. The traders were told to reduce MRP in accordance with the lowered GST in consultation with manufacturers and affix stickers of the new MRP on packages. "If traders affix the new MRP, then it must not mask the older one, as the consumer should know the difference between the old and new price. But many traders are found to be selling at old MRPs. There have been instances where sellers are collecting higher prices than the old MRP in the guise of GST," said M Mamatha, assistant controller of Karnataka Legal Metrology. Mamatha, who heads a flying squad, said the department of legal metrology carried out 1,557 inspections for four days after November 24 across Karnataka and 183 cases of profiteering were booked. "A few sectors, including ceramic ware, are following the MRP rules, while many commodities, especially from the FMCG and stationery sectors, are being sold at higher prices," she said. Traders, however, are distraught over frequently changing GST rules, making compliance practically impossible. "On July 1 when GST was rolled out, they asked us to affix new MRP stickers on every package. While the manufacturers were supplying stickers to dealers, new rates were announced in November. How can you expect traders to dance to the changing tunes?" asked B Suresh, president of Kolar district Federation of Karnataka State Chambers of Commerce and Industries. "The concern is that traders have already paid 28% GST and they should collect 18% tax from consumers. There's no clarity on how they will get back 10% of the excess tax they have paid. Unless the government sets up an effective mechanism for refund, the new rules will be seen draconian," said B T Manohar, chairman of states taxation committee of FKCCI and member of Karnataka state GST advisory committee.

It's been a month since the Central government slashed GST rates on 212 items of mass consumption, but businesses are yet to fall in line. Many are keeping the lion's share of GST gains to themselves, leaving the common man to feel the pinch of the new tax rules. The government may have put in place guidelines and set up an antiprofiteering authority to monitor compliance, but on the ground, concerted efforts are needed to check malpractices related to pricing. Else, Goods and Services Tax, considered to be a transformative step aimed to benefit the entire economy, will help only a few sections.

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