Ache din .. aa gye..Prices reduce post GST

After a month and half of GST implementation, good news has started pouring in for the masses.

FMCG(Fast Moving Consumer Goods) segment is witnessing a downward trend in prices.. as prices of most of the items have reduced from 3%-8%.

Big industry giants like Hindustan Unilever and ITC have reduced prices of FMCG products such as soaps, shampoo, detergents, biscuits and savoury snacks, among others.

Reduction by these manufacturers has led to decrease in prices of goods across across modern retail outlets, including Big Bazaar and Hypercity, apart from online grocery firms such as Bigbasket and Grofers.

For instance,

·       Hair oil, toothpaste and soaps have been put under the 18% tax slab, significantly lower than the previous 22-24% slab.

·       Biscuit manufacturer Unibic India has brought down prices by 10%-20% across products

·       Prices of other food products such as museli too have come down

·       A Surf Excel bar, which would earlier cost Rs 29, is now being sold at Rs 27

·       Company is currently selling a pack of four Lifebuoy Activ Silver at Rs 94, instead of Rs 104.

Lowering of prices has helped boost sales. As priced fall down, more and more people start buying products as it is within their budget. So, a fall in price helps the buyers as much as it helps the sellers.

Grofers, the electronic supermarket, was clocking a 15% spurt in monthly sales. But after GST, the figure had risen to 23%. That is a significant increase for a start up.

The reason behind this reduction is said to be the Input Tax Credit that is now available under GST.

We know, in previous indirect tax regime, input credit of one tax(say excise) could not be utilised against any other tax(say Service Tax).. this led to increase in cost.

With the introduction of GST, there is free flow of input tax credit. And because of this, manufacturers are passing on the benefits to consumers in terms of reduced prices.

Experts believe once manufacturers get more clarity on input tax credit, a further reduction in rates is on the cards.

Besides availability of ITC, another factor is effect of GST on logistics and warehousing.

Being a cut down on barriers, the efficiency has increased tremendously under GST. This translates to lower cost and thus lower prices.

GST has done away with checkpoints and barriers at every state border.. this has helped in fast movement of goods from one place to another.. so time is saved, cost is saved and efficiency is increased.. this ultimately leads to reduced prices.

However, one must not become a total shopaholic.. because experts have expressed that big companies still have three-five months of old stock which belongs to the pre-GST regime.

This is the stock which was produced before GST implementation.. and taxes on these have been paid according to previous tax structure..The larger impact would be clear only once the old stock gets completely replaced by new items.

Well this may dampen a spirit a bit, but we still have another couple of months to buy things at lower price and pamper ourselves. So don’t limit yourself.. go out this festive season and make the most of “Ache Din” while they last.