Nestle to pay up for failing to pass on GST cut benefit

Nestle 0.19 % India is in the process of depositing a transition amount in the consumer welfare fund for not immediately passing on benefits under the goods and services tax (GST), the latest in a line of companies including Hindustan Unilever that have been making such payments after the National Anti-profiteering Authority called on them to do so. Nestle didn’t give details of the amount involved. 

In November last year, GST on 178 daily use products including chocolates and cocoa-based products was slashed to 18% from 28% as the government sought to ease the burden on consumers hit by price increases on account of the new tax regime. The government had pushed companies to reduce prices in line with the cuts and ensure the benefits of the move were passed on to consumers. Nestle said it had made sure to exclude such amounts from its accounting. “In situations where the benefit could not be passed on instantly by reduction in MRP (maximum retail price) or increase in grammage, the amount was set aside to be subsequently passed on and was not reckoned either in sales or in profit,” a Nestle spokesperson said in an email.

Soon after the GST rates were reduced, companies began releasing ads informing consumers about revised prices, and putting in place software to monitor billing and invoicing at retail stores.