It's good news for those who were afraid of what goods and services tax (GST) holds in terms of prices for groceries, household and personal care products.
The prices will not be changed for at least six to eight weeks after GST is implemented on July 1 st , since companies dealing in these areas aren't too sure about the affect that these companies will have on their cost of operations.
While several household products like cookies, toothpastes, soaps and hair oils will be taxed lower at 18% after GST as compared to the present charge of about 22% in the current indirect tax structure of excise duty and value-added tax.
However, other household detergents like shampoos and skincare products will be charged higher GST of 28%.
"While our intent is to pass on the benefits of lower GST in the relevant categories where rates are coming down to consumers as soon as it is feasible, there are still some open issues where we need clarity such as how area-based exemptions will be handled, that will impact pricing decisions," said Godrej Consumer MD Vivek Gambhir.
In case of items for which rates are going to increase after GST, there are no price changes planned.
As per retailers and distributors, products of Hindustan Unilever, Marico, Dabur, Colgate, Procter & Gamble and Britannia will remain unchanged at least until August.
"There are hardly any changes in either price or grammage for the new stock that will hit the market from next week onwards," said an HUL distributor requesting anonymity.
"We can't change price points such as Rs 5 and Rs 10. The only option would be to reduce or increase weight, but it won't be based on just GST on final products," said Mayank Shah, group product manager at Parle Products. "We need one-two months to see if the new tax has any impact on the cost of products and what will be the credit on input to offset them."
Also, there would be no changes in the prices of milk, another household item that constitutes country's largest consumer segment - milk and curd.
"We will drop prices of milk powder and baby food by close to 5%," said RS Sodhi, managing director of Gujarat Cooperative Milk Marketing Federation (GCMMF), owner of Amul. "But the new pricing will reach consumers only after a week or 10 days once the existing inventory gets exhausted."
On Tuesday, Coca-Cola India had announced that it will increase prices of its aerated beverages and reduce the prices of packaged drinking water brand Kinley.
It added that since aerated beverages will be attracting the maximum GST rate of 40%, they will be the worst hit segment post GST.
