The government is asking consumer goods companies as well as others dealing with over 200 items, where goods and services tax (GST) has been reduced, to immediately pass on the gains to consumers.

A senior officer told TOI that with the levy slashed from 28% to 18% for 176 items, including shampoo, washing powder and deodorants, the government expected prices to come down by 8-9%. The official added that the Central Board of Excise and Customs (CBEC) has initiated talks with companies and is also writing to some of the top players.

While some of the companies have indicated that the process may take a while, officials said, the price cut should be immediate and should be communicated to the distributions channels. "The transmission should not take more than five or six days. If excess tax has been paid, it will be refunded through tax credits. So, businesses need not worry," said the tax official, who did not wish to be identified.

The decision to reduce the levy was taken by the GST Council comprising state finance ministers and headed by union FM Arun Jaitley on last Friday, it has been effective from Wednesday.
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Inflation has gone up. Simple for traders/business houses to prove increase in price and not passing on tax reduction.

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While the Centre is initiating steps to pass on the gains, some of the states are also tracking price behaviour closely. For instance, Bihar deputy chief minister Sushil Modi has said that state government officials have been asked to undertake a "market survey" about the prices of various products and compare prices pre- and post-reduction of the rates.

Some of the states have been complaining about industry's reluctance or refusal to pass on the benefits of lower tax since the introduction of GST in July. The Centre, which was keen to ensure that prices didn't rise in the new price regime, especially items of mass consumption, has however, seen price benefits being passed on to consumers in most of the cases, officials said.