3 in 4 Consumers Doubt Brands Will Pass on GST 2.0 Rate Cuts, Finds LocalCircles Survey

Moneylife Digital Team 09 September 2025

Consumer Interest

As India gears up for a major shift under the reformed goods and services tax (GST 2.0) framework later this month, a large number of consumers in India are worried that businesses and brands may not pass on the benefits of reduced GST slabs to them. A new survey shows that three out of four consumers remain sceptical about brands lowering prices despite tax cuts, citing past experiences where the benefits of reduced GST rarely translated into lower maximum retail prices (MRPs). Instead, companies often retained or even raised prices, citing higher input costs. Reflecting this distrust, 87% of consumers surveyed by LocalCircles want the government to revive an anti-profiteering or unfair trade practice enforcement mechanism to ensure that the benefits of GST rate reductions are genuinely passed on to the public.

The survey, which received over 39,000 responses from 314 districts across India, shows that 87% of respondents want the government to activate an anti-profiteering or unfair trade practice enforcement mechanism to ensure compliance.

GST 2.0: Major Rate Cuts, Bigger Questions

Under GST 2.0, effective from 22 September 2025, most goods and services will be taxed at 5% and 18%, with only 'sin goods' attracting a 40% rate. Many items have seen steep reductions—for instance, some products have moved from 28% to 18% and others from 12% or 18% to 5%.

The intent behind these reforms is clear: stimulate demand, simplify compliance and ease consumer burden. But whether businesses will transfer these savings to the end-consumer remains in doubt.

Survey Highlights

Consumer confidence in brands passing GST benefits

25%: Quite confident

42%: Partially confident

33%: Not confident

Support for Enforcement

87%: Want revival of anti-profiteering authority

13%: Believe no such mechanism is needed

The Enforcement Debate

India’s first anti-profiteering watchdog, the National Anti-Profiteering Authority (NAA), was set up in 2017 to ensure that businesses passed on tax benefits to consumers. However, it was dissolved in December 2022 and responsibilities were shifted to the competition commission of India (CCI) which struggled with the role. By 2024, cases were redirected to the GST appellate tribunal (GSTAT), with a sunset clause invoked in April 2025.

Now, amid GST 2.0 reforms, discussions are underway to revive a dedicated anti-profiteering mechanism—potentially with better methodologies and quicker grievance resolution.

Past experiences weigh heavily on consumer trust. According to LocalCircles, tax cuts have rarely translated into reduced MRPs. Instead, many brands have cited rising input costs to retain or even hike prices, effectively nullifying government reforms meant to help citizens.

LocalCircles says it will escalate survey findings to key stakeholders in the GST council and Central government, pushing for mechanisms that enable easy consumer reporting and ensure businesses comply with GST 2.0 benefits.

The GST 2.0 reforms promise to simplify taxation and reduce costs for millions. But unless robust enforcement mechanisms are put in place, the gap between policy intent and consumer experience may persist. With nearly nine in 10 consumers demanding stricter checks, the government faces mounting pressure to ensure that brands do not profiteer at the expense of the public, LocalCircles says.

Comments

User

gopalakrishnan.tv

2 months ago

As long as the Governance system is weak , the greed and profiteering remain a strong and insatiable force ,and fear for the laws of the land is absent for want of effective enforcement the new GST 2.0 cannot be expected to boost the investment and consumption demand . The objective no doubt remains laudable and needs to be pursued vigorously the mindset of the administration and the business community needs a total transformation to accept and implement the reforms in letter and spirit .