GST 2.0: Will Two Slabs Really Cut Prices—Or Just Help Businesses Jack Them Up?

The government sold GST 2.0 as a “simplification”—two slabs instead of the confusing multiple rates. On paper, that sounds like a win for the common man. Less tax, fewer complications, cheaper goods.

But here’s the thought-provoking twist: what if businesses simply use this as an excuse to reprice their products, and we never see the benefit?

Cement: The Textbook Case of Price Collusion

Cement companies are masters of “synchronized swimming.” One brand announces a hike, and within days, every other brand follows. Associations call it “standardization,” but for consumers, it’s cartel behavior in plain sight.

Now, if GST 2.0 lowers the slab on cement, you’d expect construction costs to fall. But what’s stopping cement associations from quietly bumping up prices and pocketing the tax cut? The consumer pays the same—or more—while corporates laugh all the way to the bank.

FMCG: Everyday Essentials, Everyday Tricks

Think soap, biscuits, and packaged food. When GST was reduced on chocolates and snacks earlier, many FMCG companies didn’t actually lower MRP. They simply shrank pack sizes or kept prices steady and pocketed the difference.

So under GST 2.0, when slabs shift, don’t be surprised if your favorite biscuit stays ₹10 but the packet suddenly loses two biscuits. Technically the price didn’t go up—but effectively, you’re paying more for less.

Automobiles: Discount Today, Price Hike Tomorrow

When tax cuts hit the auto sector in the past, companies rolled out “limited-time discounts” instead of permanent price reductions. Once the initial hype passed, list prices crept back up, citing “input costs” or “currency fluctuations.”

Under GST 2.0, the auto lobby could very well follow the same script: use the cut for a short PR boost, then quietly hike prices, leaving buyers no better off.

Electronics: Imported Excuses

From TVs to smartphones, electronics companies are champions at finding excuses to avoid passing on benefits. The last time duties and GST rates were adjusted, many brands claimed the falling rupee or rising global chip costs offset the cuts. Net result? Your gadget prices didn’t budge.

With GST 2.0, expect similar stories: tax cuts lost in translation, buried under “import cost” jargon.

The Number Game: How Tax Cuts Disappear

Let’s take a cement bag as an example:

• Before GST 2.0
  • Base price (set by company): ₹300
  • GST @ 28%: ₹84
  • Final price to customer: ₹384
• After GST 2.0 (slab reduced to 18%)
  • Base price (unchanged): ₹300
  • GST @ 18%: ₹54
  • Final price should be: ₹354
  • Expected saving for consumer: ₹30

But here’s the corporate trick:

• Companies increase the base price to ₹330 (citing “input cost, demand, association consensus”).
• New GST @ 18%: ₹59.40
• Final price to customer: ₹389.40

Shocking outcome: the GST cut that should have saved you money actually costs you ₹5.40 more than before. The entire benefit is eaten up by a stealthy base price hike.

And this playbook works across sectors—from biscuits to cars.

The Consumer’s Bottleneck

All of this reveals a brutal truth: GST cuts do not guarantee price cuts.

• In industries with strong associations, collusion trumps competition.
• In FMCG, “shrinkflation” disguises inflation.
• In autos and electronics, clever excuses erase any benefit.

The bottleneck is not tax policy—it’s corporate behavior. And unless regulators break these cartels, GST 2.0 may only fatten margins, not thin your bills.

Where’s the Regulator?

India’s Competition Commission (CCI) is supposed to stop cartels. But action is rare, slow, and often symbolic. Penalties are tiny compared to the windfall profits companies earn through collective price hikes.

Unless the CCI and consumer protection bodies act in real-time, GST 2.0 risks becoming another hollow reform: great for headlines, disappointing for households.

The Shocking Reality

So here’s the naked truth: GST 2.0 will only benefit common people if two conditions hold:

1. Businesses pass on the tax cuts honestly.
2. Regulators prevent cartelization and shrinkflation.

If not, expect to clap for “lower taxes” while paying the same—or more—at checkout.

Final Thought

A two-slab GST system is a bold move. But tax policy without market discipline is like pouring water into a leaking pot. Unless India fights corporate collusion as fiercely as it simplified GST, the only winners of GST 2.0 will be the businesses who hijack reform for profit.

For the common man, the question remains: are we celebrating lower taxes, or are we trapped in yet another Great System of Transfer—from our wallets to corporate balance sheets?

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