PRICE INCREASES AFTER GST

Everyone is talking about reduction in the prices, post reduction in rate of GST effective 27.7.2018. That is a valid concern. But most and even the government, have missed another major area of concern which started immediately after GST was implemented in June 2017.

Before GST, all bigger companies, and many smaller ones too, were covered under central excise act and were accordingly levying excise duty on the exfactory price of products. Excise duty was anything upto 28% of the exfactory price. Post GST, what these businesses did was include the amount of erstwhile excise duty in the basic price of the product, and then subject the whole to GST. This naturally resulted in unjust enrichment of the businesses and hence the price of all products, particularly industrial inputs, rose post GST. Most people thought that this is due to GST 18% to 28% (these rates absorbed the then VAT and excise duty) or so levied on the item, but that is not so. The government and people have failed to notice this and only concentrated on the reduction effective only due to rate of GST, without realising that the basic pre-GST price itself has been hiked to the extent of previous excise duty. Therefore without any violation of GST rates, the total price has increased. For the record, in my experience, there is very little or no violation of GST rate, but there is large scale jugglery as described above. Such jugglery has been missed putting the blame on GST.

Has the government done anything to rein in this ? The government should conduct a cost audit of large business in the basic sectors like steel, copper, cement, and major industrial input materials etc. This will have a chain effect of bringing down the prices. more