New Delhi, Sep 26 (IANS) The Centre is closely monitoring whether companies are passing on the benefits of the recent Goods and Services Tax (GST) rate cuts to consumers, and enforcement measures will only be decided after field reports are analysed by the end of September.

“We are awaiting inputs from field formations by the end of this month. We cannot have knee-jerk reactions to fresh reforms; they need time to settle,” a government source said.

Over 50 products from various categories are being examined, and nationwide retail pricing data is being gathered. According to preliminary monitoring, the tax cuts are already being reflected in the prices of almost 90 per cent of sectors.

While smaller retailers and unregistered dealers may take longer because of existing inventories, larger companies — especially in the cement, automotive, and e-commerce sectors — are anticipated to lead the transition.

Older stocks are currently unaffected, but luxury brands are already passing on reductions in new stock.

According to an official source, “The entire value chain will eventually show gains, even though unregistered dealers may not be able to pass the benefit immediately.”

The problem of inverted duty structures, in which input taxes are higher than finished goods taxes and result in blocked credits, was also brought to the attention of officials.

“We are planning an automatic refund system for inverted duty, for which an amendment will be made,” sources said.

Since consumer demand usually peaks during the upcoming holiday season, the effects of the GST rate reductions should be more apparent during that time. Officials reaffirmed that enforcement, if necessary, will only be taken into consideration once there is enough field evidence.

The monitoring exercise comes after the government unveiled GST 2.0, a significant reform that reduced the indirect tax structure to just two slabs — 5 per cent and 18 per cent for goods — replacing the previous multi-tiered system.

The GST Council has also approved a significant tax hike on sin and luxury goods, introducing a new 40 per cent slab for items like tobacco, aerated drinks, and premium vehicles.

The decisions were made at the 56th GST Council meeting earlier this month.

— IANS

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