Centre Vows To Guard Consumer Gains As GST Cuts Set To Kick In For Everything From Rotis To Suvs

(MENAFN- Live Mint)

New Delhi: As a rejigged indirect tax regime prepares to roll in on 22 September, the Centre is taking steps to ensure the benefits of a radical tax reduction exercise actually benefit the consumer.

On Wednesday, goods and services tax (GST) rates were brought under two slabs-5% and 18%-from four earlier. Several goods were moved from the earlier 12% and 28% slabs to lower slabs, some were even moved down from 18% to 5%, and a host of essential items were exempted from GST altogether.

To ensure these changes are effected by companies selling these goods and services, the Union consumer affairs ministry will scan complaints on social media, review representations made by consumer groups, and closely monitor complaints received in the national consumer helpline (NCH)-the government's central grievance redressal system-according to two people aware of the matter who spoke on the condition of anonymity.

At the same time, tax authorities will also be closely monitoring the price behaviour of businesses after 22 September to ensure consumers get the full benefit of the GST rate cuts, chairman of Central Board of Indirect Taxes and Customs (CBIC) Sanjay Kumar Agarwal said in an interview to Mint.

“The objective is to ensure affordability for consumers and prevent denial of rightful benefits," said the first person cited above.

Also Read | GST rate cuts won't touch gold and silver-why precious metals stay at 3

“Denying the benefits of GST cuts to consumers will be treated as an unfair trade practice, and notices will be issued," the second person cited above said, adding that the ministry will take suo motu cognisance of failure to pass on benefits.“If the responses are found to be unjustified, penalties will follow."

Failure to pass on the benefit of GST reduction to consumers can be treated as an unfair trade practice under Section 2(47) of the Consumer Protection Act, 2019, according to the second person. In such cases, the Central Consumer Protection Authority (CCPA) has the power under Sections 20 and 21 to impose penalties of up to ₹10 lakh for the first violation and up to ₹50 lakh for repeat offences.

At the same time, both persons said the consumer affairs ministry will stay out of tax disputes and appeals, and restrict its role only to ensuring that consumers receive the benefits of the revised GST rates.

According to a finance ministry notification, the goods and services tax appellate tribunal (GSTAT) will be made operational for accepting appeals before the end of September, and is expected to begin hearings by December 2025.

Queries sent to the consumer affairs ministry on the above plan remained unanswered till press time.

Also Read | Opposition-ruled states urge Centre to set up GoM to assess GST revenue los

However, on Thursday, Union minister for consumer affairs, food and public distribution Pralhad Joshi told Mint that for food products, the GST is either zero or a maximum of 5%.

“As we deal with the department of consumer affairs and food, this simplified GST will help consumers, MSMEs and small enterprises," he said.“It is the biggest gift for consumers, with prices of essential items set to come down. Everyday foods such as dosa, roti, milk and other basic items now attract zero GST."

What experts are saying

Abhash Kumar, assistant professor of economics at Delhi University, said the GST cuts will directly lower prices across categories.

“For items that are now GST-free, like milk, roti, dosa and bread, prices may fall by 3-5%," he said.“Products that moved from 12% to 5%, such as packaged food, footwear and apparel under ₹2,500, could see a reduction of 6-7%." Kumar further added that goods shifted from 28% to 18% are expected to become cheaper by 8-10%.

Essential items consumed daily such as UHT milk, pre-packaged paneer, and Indian breads including roti, chapati, paratha, khakhra and pizza bread now attract zero GST. Medicines, especially 33 life-saving drugs that were earlier taxed at 12%, along with three specialised drugs for cancer and chronic conditions that carried a 5% levy, have also been moved to the nil rate category. In addition, individual life and health insurance policies are now fully exempt from GST.

The exemption has also been extended to education-related products, with uncoated paper, exercise books, pencils, erasers, crayons, sharpeners, maps, globes and laboratory notebooks all placed in the zero-tax bracket, easing the cost burden on students and parents.

Also Read | How new GST slabs could transform India's apparel marke

Further, according to Miren Lodha, senior director at Crisil Intelligence, the new GST rates will lower the prices of products in key sectors such as automobiles and consumer durables.

For instance, in the case of small cars and compact utility vehicles, which collectively account for around 55% of the passenger vehicle industry volume, the rate cut is expected to result in an 8-9% price reduction,“leading to a 200 bps improvement in volume to 4-6%, compared with our earlier estimate of 2-4%".

For tractors, the rate cut to 5% from 12% is expected to lower acquisition cost, translating into savings of ₹40,000-60,000 per unit in the core 41-50 horsepower segment, Lodha said, adding that the price fall will be immediate at the invoice stage and will not hinge on registration, increasing the affordability for both registered and non-registered usage.

“With this, we expect the industry to see a volume growth of 8-10% this fiscal, up 150-200 bps from our previous estimate of 7-9%," said Lodha.

With inputs from Gireesh Chandra Prasad.

Also Read | GST rate cut fuels consumption rally as investors bet on autos, durables, FMC

MENAFN05092025007365015876ID1110024368