Consumer durables such as TVs, fridges, laptops, washing machines and ACs are flying off the shelves as the clock ticks away to the Goods and Services Tax (GST) regime that begins from July 1.
Hoardings, boards, stickers, placards screaming “pre-GST sale” are offering discounts up to 50 per cent on products, and hoards are rushing to buy even if the actual savings boil down to not much.
“My family needed a washing machine and we saw advertisements of discount up to 50 per cent. I have just bought one, but got around 20 per cent discount only,” said Saurabh Raj, a partner in an elevator manufacturing firm. “It’s not a big deal; shops normally give 10 to 15 per cent discount on consumer durables.”
Anuradha Singh, a homemaker, was happier with her AC purchase.
“It is the peak period for sale of ACs. In the first week of April, shops were offering just 5 per cent discount after bargaining, and free installation. Today they gave me 12 per cent discount, free home delivery and installation. I saved Rs 2,100,” she said.
The Great Eastern Trading Company showroom on New Dak Bungalow Road was brimming with shoppers. Its manager Rajesh Jain said: “We started the pre-GST sale on June 26 and our daily sales have shot up by three times in comparison to before.”
Most electronic gadgets will attract 28 per cent GST — slightly more than the existing 15 per cent VAT (value added tax) imposed by the state plus around 12 per cent central excise. However, nobody is sure what the prices will be after GST as the manufacturers will be claiming “input tax credit” or taxes they paid on materials used in manufacturing the product.
It has to be passed on to the consumers under Section 171 of the Central GST Act as part of the anti-profiteering measures, and prices post-GST may actually see a dip. But no one is reading the fine print for now.
“Customers are flocking to shops and malls as they are unable to fathom the impact of GST on prices,” said Rajesh. “Even we are not sure about the final impact on MRP (maximum retail price).”
Consumer durables being sold with pre-GST offers have been manufactured before June 30, 2016, and the central government will not provide rebate of excise tax levied on them. Products manufactured after June 30 last year will receive excise tax rebate and input tax credits, hence they are mostly not on offer or carrying paltry discounts.
“Laptops and printer-cum-scanners now attract 6 per cent tax, but post-GST it will shoot up to 28 per cent. I don’t think this large gap will be filled by tax credits claimed by manufacturers and prices of these products will increase,” said Anil Kumar Sinha, who runs an authorised retail centre of Dell computers.
Anil said he has managed to clear over half of his stock till now in the pre-GST sale that he started on June 15; he will return unsold stock after June 30 to the manufacturer.
“Previously, we ensured a margin of at least Rs 1,000 on every laptop we sold. Now we have lowered it to Rs 100. In some cases we waived off our entire margin to clear stock. We are waiting for new prices and fresh stock from the company. The exact impact of GST on prices will be known in a month or two,” Anil added.
Motorbikes could see a slight increase of 0.5 per cent to 1 per cent in prices as they are in the 28 per cent GST category. Till now buyers had to shell out 15 per cent VAT and 12.5 per cent excise in Bihar.
