ACs, TV Sets and Dishwashers Get GST Cheer This Festive Season

Chennai: Consumers can expect a drop in prices of air conditioners, television sets and dishwashers this festive season. The Onam sales of consumer durables show that customers had postponed their purchases in the hope of a GST rate cut.

After a bad summer, AC makers are expecting good sales this festive season. The tax cut will prompt customers to replace their old Acs or new ones, buy a model with higher energy rating, buy additional appliances and prepone their purchases scheduled for next summer. Further, the GST rate cut in other product categories will provide more disposable income, which can get diverted to consumer durables.

“Customers can save Rs 2500- Rs 3500 this festive season for ACs, depending upon the models as the GST rates have been slashed from 28 per cent to 18 per cent,” said B Thiagarajan, MD, Bluestar. According to him, as the GST is added to the price of the product, consumers will see a 10 per cent drop.

However, Kamal Nandi, Business Head & EVP at Appliances Business of Godrej Enterprises Group, finds that customers can expect a 7-8 per cent drop in the end price as GST is levied on the basic price.

The inventory which is already with the dealers will have to face a higher input tax credit and a lower output tax. The excess interest burden will have to be carried for two to three months.

LCD and LED television sets, too, would see a drop in prices. The rate reduction will also shift demand for larger screen sizes.

Dishwashers are a small category in consumer durables. The demand for dishwashers, especially in urban areas, can see a jump.

Meanwhile, the market for consumer durables has been seeing a lull since August 15, when the rate cut decision was announced. Consumers have been postponing their purchases, and this has been evident from the Onam sales.

“Dealers had stopped buying inventory since Independence Day. Onam has been a wash-out. But that will not affect our overall sales as we would see customers back in the stores from September 22,” said Thiagarajan.