3000 GST complaints, with states calling for reform amid FMCG slowdown

The government’s recent Goods and Services Tax (GST) rate cuts have triggered a surge in consumer complaints, exposing persistent gaps in how tax policy translates into real benefits for households.

Consumer affairs secretary Nidhi Khare said on 29 September, Monday, that the National Consumer Helpline (NCH) has received close to 3,000 grievances since the revised GST rates came into effect, with most alleging that retailers and service providers have failed to pass on the reductions.

According to Khare, many businesses continue to charge the earlier, higher rates or have not lowered final prices despite the tax relief. The NCH, which serves as the Centre’s primary grievance redressal platform, is actively reviewing these complaints. Officials have promised action in confirmed cases of non-compliance.

Consumer advocacy groups have, meanwhile, urged the government to impose stronger penalties and speed up enforcement to ensure that the intended relief reaches the end customer.

The issue highlights a recurring challenge in India’s indirect tax regime. While the GST Council has lowered rates on several essential goods and services to purportedly ease household costs, the benefits depend on companies promptly adjusting their pricing.

Without robust oversight and deterrent action, consumer groups warn, the credibility of the system risks being undermined.

The spike in complaints also reflects a rise in consumer awareness and vigilance, but questions remain about the current effectiveness of enforcement.

“Unless penalties for violations are enforced more strongly, the gap between tax policy and its impact on consumers will persist,” a consumer rights campaigner said.

The latest rate changes — dubbed GST 2.0 by the Narendra Modi and Nirmala Sitharaman dispensation — have also intensified concerns among state governments over revenue shortfalls and structural imbalances.

Telangana deputy chief minister and finance minister Bhatti Vikramarka Mallu, along with Kerala’s finance minister K.N. Balagopal, has called for a fundamental rethink of the system.

Mallu has pointed out that the Centre had initially assured the states of a 14 per cent annual revenue growth after the rollout of the GST regime; but actual collections have hovered around 7–8 per cent, well below expectations. He also criticised the absence of state representation in the GST Council secretariat and raised concerns over the formula for sharing revenues among states.

The transition to the new rate structure is creating turbulence in the private sector as well.

Hindustan Unilever Ltd (HUL), one of the country’s largest fast-moving consumer goods companies, has warned of ‘near flat to low-single digit’ growth in the July–September quarter due to a slowdown in distributor orders and delayed consumer purchases.

The company said distributors are holding back orders to clear older inventory priced under the previous tax rates, leading to short-term disruptions that it expects to last into October.

Despite the near-term challenges, both policymakers and companies remain optimistic about a rebound. With lower GST rates and recent income tax cuts expected to boost disposable incomes, analysts anticipate stronger consumer demand from November onwards.

However, for many households, the immediate concern remains ensuring that the promised tax savings are reflected in the prices they pay at shops and service counters.