The rollout of the new Goods and Services Tax (GST) regime on Monday sparked brisk consumer activity, particularly in the automobile and consumer durables sectors. Car showrooms were buzzing, consumer durable stores received a flood of inquiries, and garment shops busily updated price tags to reflect new tax rates.
Car dealerships saw brisk business, with executives attending to customers through the day — especially for small cars, which saw a GST rate cut from 28% to 18%.
“For smaller cars, where cess was not applicable, customers had been holding back purchases until the GST revision took effect. Many paid booking amounts earlier and completed their purchase on Monday,” said Akhil Agrawal, managing director of Gajraj Hyundai and Gajraj Kia.
Among the buyers was Subhasish Das, a 45-year-old FMCG employee from Mandirtala, Howrah, who purchased a Kia Seltos at a Kalikapur showroom. The price dropped from around ₹9.5 lakh to ₹8.75 lakh after the GST cut, saving him more than ₹80,000 after additional discounts.
“I planned to buy during the festive season but waited after the GST cut announcement. The savings made it worthwhile,” Das said.
Discounts
The GST Council’s September 4 reforms streamlined tax slabs to 5% and 18%, providing relief on small cars, bikes, and household items. Mid-size and large cars still attract a 40% special GST, which is still lower than the earlier combined rate of 28% GST plus a cess of 17% to 22%.
When it came to big cars, most dealers offered substantial discounts between September 4 and September 22 to offset the losses they feared after the removal of the cess.
Dealers offered steep discounts between September 4 and 22 to clear inventory burdened with cess credits, which they could no longer recover under the new regime.
“The removal of cess meant accumulated cess credits on existing stock would become unusable if sold at new rates. To avoid bigger losses, dealers discounted cars significantly before the new rates kicked in,” explained a senior official from an automobile company. This strategy helped boost sales ahead of the GST changes.
Consumer goods
Consumer durables stores also witnessed a spike in inquiries. The GST on air conditioners and dishwashers dropped from 28% to 18%, prompting retailers to update price tags and highlight the savings.
“We have been flooded with questions since the new GST rates came into effect. We are also offering discounts to ride the wave of increased consumer interest,” said Manoj Khosla, managing director of Khosla Electronics.
Sujoy Pal, a delivery partner with an online supermarket, bought a new 1.5-tonne AC priced around ₹41,500 after the GST cut, down from ₹47,000.
Garments
Garment retailers scrambled to replace thousands of price stickers that arrived ahead of the GST changes. The tax on garments priced above ₹2,500 rose from 12% to 18%, while for those below ₹2,500 it dropped from 12% to 5%.
“We received about 6,000 new price stickers, one for every product, which we had to put up quickly,” said Sudip Paik, manager at a menswear store in South City Mall.
Invoice software was updated in advance to reflect the new GST rates, retailers said.