GST effect: Discounts pour in early this year

Prices of consumer electronics are expected to go up by 5 per cent after GST comes into force.

Update: 2017-06-10 21:06 GMT
Manufacturers are cutting down production ahead of the GST rollout due to lack of clarity on tax rates.

Hyderabad: Thanks to the impending introduction of the Goods and Services Tax, the festive season offers have come early this year.

Electronic goods such as TVs, refrigerators, air-conditioners, washing machines, mobile phones and so on are being sold for discounts of up to 40 per cent as electronic shops attempt to clear sales of old stocks ahead of the GST roll-out on July 1.  

Dealers fear they will suffer losses of up to 10 per cent on sale of old stock after GST on account of increase in taxation under the new tax regime. The usual festival discounts during Dasara and Diwali may not be possible this year as the prices will increase under the new tax slabs.  

“Normally, electronic goods shops offer special discounts during the festive season, between September and December, preceded by huge publicity campaigns.

But all the major electronics shops have launched their publicity campaigns offering special discounts in June to clear old stocks,” said Ch.Srinivas, manager of a prominent electronics retail store in Vidyanagar.  
Though the GST Council has agreed to increase input credit to 60 per cent from 40 per cent on the transitional stock for products in the GST slab of 18 per cent and more, retailers are worried that this may be applicable only for a limited period. Under GST, a majority of consumer goods and electrical appliances fall in the 28 per cent slab, an increase from the 18-24 per cent slab prevalent now. Retailers estimate they will make a loss of about 6 per cent on unsold stock purchased before May, and about 14 per cent on one-year-old inventories, against which input credits cannot be availed.  

“Retailers want to liquidate their entire stock as they cannot bear the load of the remaining 40 per cent GST which will not be credited to them on unsold inventory. This is the reason for announcing special offers in June itself this year,” said a representative of a major retail brand store in Panjagutta.  

Prices of consumer electronics are expected to go up by 5 per cent after GST comes into force.

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