GST Cut Won’t Lower ₹5, ₹10, ₹20 MRP Packs, But Here’s How You’ll Still Get Benefit
On September 22, 2025, India’s Goods and Services Tax (GST) Council will implement a major overhaul, simplifying the tax structure into two main slabs—5% and 18%—while introducing a 40% slab for luxury and sin goods. This reform, aimed at reducing costs for daily essentials, has sparked excitement among consumers expecting price drops on fast-moving consumer goods (FMCG) like biscuits, soaps, and toothpaste. However, FMCG companies have announced that the maximum retail prices (MRPs) of popular ₹5, ₹10, and ₹20 packs will remain unchanged. Instead, they plan to pass on the GST cut benefits in a different way. This blog explores why prices won’t drop and how consumers will still benefit from the tax reform.
Why MRPs Won’t Change
The GST reduction, which lowers taxes on many FMCG items from 18% or 12% to 5%, was expected to make low-cost products like ₹5 biscuits, ₹10 soaps, and ₹20 toothpaste packs cheaper. However, leading FMCG companies, including Dabur and Bikaji Foods, have informed the Central Board of Indirect Taxes and Customs (CBIC) that reducing MRPs for these packs is impractical. The primary reasons include:
Consumer Price Sensitivity: Indian consumers are accustomed to fixed price points like ₹5, ₹10, and ₹20, which are psychologically significant. For example, a ₹20 biscuit pack dropping to ₹17.80 after the GST cut to 5% could confuse buyers and disrupt purchasing habits, as odd denominations are less appealing in the mass market.
Operational Challenges: Adjusting MRPs across millions of small packs already in circulation is logistically complex. Companies would need to recall and relabel inventory, which is costly and time-consuming. Instead, they’ve opted for a simpler solution to pass on benefits.
Market Dynamics: FMCG executives argue that maintaining these price bands preserves brand trust and market stability. Rishabh Jain, CFO of Bikaji Foods, explained that changing MRPs could disrupt consumer behavior, potentially impacting sales.
How Consumers Will Benefit
While the MRPs of ₹5, ₹10, and ₹20 packs will remain the same, FMCG companies have devised an alternative way to ensure consumers reap the benefits of the GST cut: increasing the quantity of product in each pack. This “extra quantity for the same price” approach means you’ll get more value without paying more. Here’s how it works:
More Product, Same Price: Instead of lowering the price, companies will increase the weight or volume of products. For instance, a ₹20 pack of biscuits might now contain a few extra grams, or a ₹10 soap bar could be larger. Dabur India’s CEO, Mohit Malhotra, confirmed that brands will “definitely pass on GST rate cut benefits to consumers” by boosting quantities, which is expected to drive demand for everyday essentials.
Examples from the Industry: Bikaji Foods plans to implement “grammage increases” in its impulse packs, ensuring consumers get more snacks like namkeen or chips for the same price. Similarly, companies like Hindustan Unilever and Procter & Gamble have announced plans to enhance pack sizes for products like shampoos and toothpaste.
Boosting Consumer Value: This approach maintains the familiar price points while delivering better value. Namit Purit, Managing Director at BCG, noted, “Instead of experiencing drastic price fluctuations, we anticipate that ₹5 and ₹10 packs will provide customers with more quantity,” ensuring affordability and accessibility.
The Bigger Picture: GST Reform and Its Impact
The GST Council’s decision to streamline tax slabs is part of a broader effort to simplify the tax structure, boost consumption, and ease the financial burden on consumers, particularly during the festive season. Items like shampoo, hair oil, toothpaste, butter, cheese, and pre-packaged snacks have seen their GST rates drop from 18% or 12% to 5%, making them more affordable. The reform is expected to increase disposable income, driving demand for FMCG products and supporting economic growth.
However, the decision not to lower MRPs has raised concerns about whether companies are fully passing on the tax benefits. To address this, the CBIC has mandated that FMCG firms submit monthly reports on pre- and post-September 22 MRPs for 54 items, including biscuits, shampoos, and toothpaste, to ensure transparency. Government officials are also considering guidelines to prevent companies from pocketing the savings, ensuring consumers truly benefit.
What This Means for Consumers
For shoppers, the GST cut won’t translate into cheaper ₹5, ₹10, or ₹20 packs at the checkout counter, but it will mean getting more product for the same price. This approach aligns with India’s unique market dynamics, where small, affordable packs dominate rural and urban retail. As the festive season approaches, with major e-commerce sales like Amazon’s Great Indian Festival and Flipkart’s Big Billion Days starting September 23, 2025, consumers can expect enhanced value on everyday purchases.
Here are some tips to maximize the benefits:
- Check Pack Sizes: Compare the weight or volume of products before and after September 22 to notice the increased quantities.
- Shop Smart: Take advantage of festive sales to combine GST benefits with discounts for even greater savings.
- Stay Informed: Monitor updates from retailers and e-commerce platforms, as they adjust to the new tax structure.
Conclusion
The GST cut effective September 22, 2025, is a game-changer for India’s FMCG sector, promising more affordable essentials for millions of consumers. While the MRPs of ₹5, ₹10, and ₹20 packs won’t decrease, companies’ commitment to increasing product quantities ensures that shoppers still get more value for their money. This innovative approach maintains market stability while aligning with consumer preferences, making it a win-win for both buyers and businesses. As the festive season kicks off, keep an eye out for those slightly heavier biscuit packets and larger soap bars—they’re the real benefit of this tax reform.
Sources: Free Press Journal, Times of India, Moneycontrol, Upstox, 5paisa, Amar Ujala, AajTak, Storyboard18
