NRP Desk
Lucknow: The authorities in Uttar Pradesh may face a major test as they gear up to ensure that the Goods and Services Tax (GST) rate cuts actually reach consumers as the new rates come into effect across the country from Monday. While the Centre has simplified slabs and reduced tax on several items, enforcement at the state level may prove difficult as disputes are also expected between retailers and customers. Across the country, FMCG majors have announced they will pass on the full benefit, and apparel and footwear prices under ₹2,500 are already seeing adjustments, though often by trimming discounts rather than lowering sticker prices. GST authorities in some states have even launched undercover checks to verify compliance. Officials in Uttar Pradesh point out that consumers often presume that, for example, if the GST rate on a commodity is reduced from 18% to 4%, the price will automatically fall by 14 percentage points. “But that is not the case. For example, if the base price of an item is ₹100, with 18% GST, the cost is ₹118. With 4% GST, it becomes ₹104, a fall of only ₹14, which is about 11.9% of the original price, not 14%. Since transport, dealer margins and other costs are also factored in, the actual reduction at the consumer end can be even smaller,” a senior state tax department official explained. The mismatch in expectations, he said, could trigger disputes between retailers and customers.
