FMCG firms say cant lower MRPs on Rs 5, 10, 20 packs despite GST cut

Instead, companies said they will keep the same price but increase the quantity inside the pack.

Consumer goods companies have told tax officials that they cannot reduce the prices of popular low-cost products like Rs 5 biscuits, Rs 10 soaps, or Rs 20 toothpaste packs, even though the Goods and Services Tax (GST) on these items has been cut, moneycontrol.com reported.

The reason is that Indian shoppers are used to these fixed price points, and lowering prices to odd numbers like Rs 18 or Rs 9 would confuse consumers and make transactions inconvenient. Instead, companies told the Central Board of Indirect Taxes and Customs (CBIC) that they will keep the same price but increase the quantity inside the pack. For example, a Rs 20 biscuit pack could now contain more grams of biscuits for the same price.

Executives from leading FMCG firms, quoted in the report, explained that this “extra quantity for the same price” approach will pass on the GST benefit without disrupting consumer buying behaviour.

Bikaji Foods CFO Rishabh Jain confirmed the company will raise the weight of its small “impulse packs” so that buyers get more value. On the same lines, Dabur CEO Mohit Malhotra told moneycontrol.com that companies would definitely pass on the tax cut to customers, adding that cheaper taxes would boost demand for everyday products.

Officials in the Finance Ministry are, however, keeping a close watch. They are considering issuing guidelines to make sure companies do not pocket the savings themselves and that consumers truly benefit, the report added.

The GST Council recently announced a major overhaul of the tax system, cutting tax on most daily-use goods to 5%. Earlier, biscuits and similar items were taxed at 18%.

Industry experts quoted by the publication believe that while overall price cuts may be modest, consumers will see bigger packs at the same Rs 5 or Rs 10 price points instead of sharp changes in sticker prices.

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