FMCG firms rattled as Delhi HC mandates price cuts instead of raising grammage, to pass on GST tweaks

The Delhi High Court’s recent order to pass on the benefits of GST rate reduction to consumers through price cuts and not through grammage increase has set the FMCG industry into a tailspin, especially about small packs priced at popular price points. In response to GST rate cuts enforced last month, many FMCG companies passed on price reduction even on smaller packs priced at ₹5 or ₹10, leading to odd price points being visible on retail shelves, such as ₹4.50 and ₹9. But other companies cut prices on large packs and increased grammage on small packs, citing coinage-related challenges. Flagging implementation issues faced by FMCG companies, Manish Mishra, Partner & Head – Indirect Tax, JSA Advocates & Solicitors, said: “There are practical considerations that need to be factored for the FMCG sector where price reduction may not always be feasible given that the goods on offer may be high on volumes but low in terms of per unit price.” Read more