The finance ministry, along with the Department of Consumer Affairs, is reviewing how companies should implement price changes following the sweeping GST rate cuts announced under GST 2.0. Industry bodies have warned that immediate repricing of all products, particularly unsold stocks, poses significant operational and financial challenges.
According to a Business Standard report, the government is considering allowing companies to factor in higher input costs already paid on inventory before mandating revised MRPs. This relief, if cleared, could be available until December 31, giving manufacturers and distributors breathing space to adjust. Officials are also studying how the directive should apply to sachet-based products like shampoos or sauces priced at Re 1 or Rs 5, where repackaging and repricing are virtually impossible. Goods already sold below the post-cut levels due to heavy discounts may also be exempt from further price corrections.
Tax experts point out that while consumers must benefit from lower rates, businesses are facing what they call a “double challenge.” Vivek Jalan, partner at Tax Connect Advisory Services, told the paper: “On one side, input tax credit on unsold stock has gone up, while refunds under the inverted duty structure are not permitted. Some flexibility in repricing will ease the transition burden.”
Separately, the ministry is examining the distortions created by moving several goods from the 12 percent slab to 5 percent without realigning duties on raw materials. This has triggered fresh inverted duty issues in FMCG and packaging sectors.
While the new structure of 5 percent and 18 percent slabs has been welcomed as a simplification, policymakers are now balancing consumer expectations of immediate price cuts with industry concerns over losses on existing stock.
