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After GST reforms, consumer watchdog to keep tabs on businesses
The CCPA will ensure businesses pass on GST benefits to consumers, monitoring prices of 430 items, with penalties for violations under the Consumer Protection Act.
The Central Consumer Protection Authority (CCPA) has been mandated to ensure that businesses pass on the full benefits of a reduced Goods and Services Tax (GST) to buyers and violators could be charged with “unfair trade practices”, an offence under the Consumer Protection Act 2019, an official said.
A special wing of the consumer-rights watchdog has been tasked with monitoring market rates of over 430 commonly traded items through field inspections, following a new, lower national consumption tax that took effect on Monday.
India on Sept 4 slashed and simplified the GST, hoping to boost local consumption in an economy battling steep tariffs imposed by the US. The GST Council approved two rates of 5% and 18% against a four-tiered tax structure earlier. A new 40% slab was added for luxury and “sin” goods, such as high-end cars and tobacco.
The country has ushered in an annual season of brisk shopping, beginning with Navratri, the nine days of festivity, which coincided with the implementation of the new tax rates, which will make most everyday goods cheaper.
“The CCPA will keep a tight vigil to ensure all benefits of the new GST regime are passed on to consumers. If there is any violation, it will be considered as an unfair trade practice and action will be taken,” Nidhi Khare, the Union consumer affairs secretary, said.
Khare, who is also the chief commissioner of the CCPA, said if there were instances of a large number of complaints against a particular entity or person, then, in such a scenario, a class-action suit would be invoked. Such lawsuits allow a person or a group of persons to press for legal action on behalf of all people who may have similar complaints.
Under the law to protect consumers, misleading the “public concerning the price at which a product or like products or goods or services are ordinarily sold” constitutes an unfair practice. The consumer rights watchdog will take up both “suo moto action” and consumer complaints related to retail prices under the GST regime.
In a speech on Sunday, Prime Minister Narendra Modi said the lower GST rates will make a host of goods affordable for ordinary Indians, urging companies to transfer the full benefits of lower taxes.
“Fulfilling personal dreams will become easier for citizens, whether it’s building a house, purchasing a TV or refrigerator, or buying a scooter, bike, or car — all will now cost less.” Modi said he was happy to see shopkeepers “actively working to pass on the benefits of GST reductions to customers”.
Alongside, the Central Board of Indirect Taxes will also monitor monthly tax realization of goods which will be compared with data from the previous GST regime, which will help in assessing how effectively the changes are being implemented by producers and sellers, a second official said, requesting anonymity.
Businesses are prepping for a smooth transition to the new GST regime. Many are likely to face “menu cost” lags, which refer to the time taken to print new minimum retail price tags, but they must charge according to the new rates immediately, said Rakesh Rathi of RR Associates, a tax-services firm. For instance, shampoo, toilet soaps and toothbrushes will now attract a 5% GST, against 18% earlier.
The country’s largest dairy cooperative, Amul, said on Sunday that it had lowered prices across all categories of nearly 700 products, including butter, ghee (clarified butter), milk and ice cream etc.
Packaged goods companies have said that, for at least a fortnight, packs bearing old rates could still be on store shelves, but shopkeepers were being instructed to charge new rates made available to all dealers, said Hemant Sikaria, the chairperson of Apex Plastics, a Sonepat-based firm.
