Major consumer goods manufacturers in India, including Hindustan Unilever Ltd (HUL), Procter & Gamble (P&G), and L’Oréal, have begun communicating with their general trade partners regarding the impending reduction in Goods and Services Tax (GST) rates on various household items. This significant rate cut, which becomes effective on 22 September following the 56th meeting of the GST Council, is prompting Fast-Moving Consumer Goods (FMCG) companies to outline new offers, price adjustments, and the transition process for their vast distribution networks.

The revised GST rates will notably lower the tax burden on several daily-use products. Shampoos, face powders, hair oil, toothpaste, toilet soap bars, toothbrushes, and shaving cream, which previously attracted an 18% GST, will now be taxed at 5%. Similarly, items such as butter, ghee, cheese, dairy spreads, pre-packaged namkeens, bhujia, and mixtures will see their GST rate drop from 12% to 5%. This government initiative is poised to make essential household goods more affordable for consumers.

Companies are actively managing the transition to these new prices, often by strategically liquidating existing stock. L’Oréal India, for example, informed its trade partners that invoicing for shampoos and face powders will reflect the new 5% GST rate from 22 September, down from 18%. While the company is in the process of revising Maximum Retail Prices (MRPs), it has assured retailers that full input tax credit will be available for products purchased at the previous rates and sold after the revision. Other product categories such as skincare, perfumes, hair colour, and serums will maintain their existing 18% GST slab.

Hindustan Unilever has launched a 'Retailer Bonanza' offer, valid from 11 to 20 September, providing upfront trade benefits across several categories. These include a 4% offer on most soaps (excluding Moti), a 7% offer on Moti soaps, 20% on small and medium shampoo bottles, 10% on large shampoo bottles, and 20% on XL and XXL packs. Additionally, Indulekha oil carries a 7% offer, Clinic Plus and Clear oils an 11% offer, and talc and face powders also an 11% offer. In oral care, Pepsodent and Close Up packs receive an 8% offer, while foods like Horlicks and Boost are at 5%, and beverages such as coffee and Red Label premix at 7%.

Procter & Gamble has introduced a “GST Special Offer” ahead of the official rate change. From 10 to 21 September, shopkeepers will receive an extra 10% top-up on products transitioning from 18% to 5% GST, including Pantene, Head & Shoulders, Gillette Personal Care, Old Spice, and Oral-B. A 5% extra top-up is being offered on items moving from 12% to 5% GST, specifically Pampers and Vicks. Products such as Tide, Ariel, Whisper, Olay, and Gillette razors will remain under their current GST slabs, with existing trade schemes continuing.

Beyond immediate offers, companies are also providing assurances to retailers regarding input tax credit. Mankind Pharma clarified to its partners that even if inventory purchased at a 12% GST rate is sold at the reduced 5% rate, the input tax credit earned remains fully available. The company assured that there would be no financial loss, encouraging retailers to maintain their regular purchasing routines and stable inventory levels. Similarly, Himalaya Wellness Co. has communicated to its trade partners about GST reductions on numerous consumer products effective 22 September, including baby diaper rash cream, Party Smart, Prickly Heat Baby Powder, baby powder, baby hair oil, baby shampoo, hair oil, shampoos, toothpaste, baby soap, bar soap (all moving from 12% or 18% to 5%), and baby diapers (from 12% to 5%). Other Himalaya products like face wash, lotions, serums, lip balm, massage oils, wipes, and hand wash retain their current GST rates. Himalaya also confirmed that input tax credit taken on existing inventory remains fully available.

Dhairyashil Patil, national president of the All India Consumer Products Distributors Federation (AICPDF), noted that this move facilitates the liquidation of existing market stock by companies. He emphasized the importance of ensuring that the benefits of these tax cuts are ultimately passed on to the end consumers. With the GST rate reductions on essential items, companies are encouraging retailers to stock up in anticipation of increased demand and higher sales during the upcoming festival season, aiming for greater market offtake.