Dealers Offer Big Discounts To Clear Stock Ahead Of GST
Many retail stores and e-tailers have announced big discounts on
electronics, home appliances, clothes, footwear and other items ahead of
the implementation of goods and services tax (GST) from July 1. Though
such promotional offers are generally announced during the Diwali
festive season, some retailers have announced discounts to clear
inventories due to the cost and process associated with making old
stocks compliant with the new indirect tax regime. The discounts come
despite the GST Council increasing input tax credit to 60 per cent from
40 per cent on stocks lying unsold up to June 30.
Besides that,
under the incoming GST tax structure, prices of some household consumer
goods such as televisions, air conditioners and refrigerators may go up
as they fall in the 28 per cent tax slab of 28 per cent. Higher prices
could hurt demand initially after the GST rollout.
Meanwhile,
leading retailers including Future Group, D-Mart and Aditya Birla Retail
discussed in Mumbai on Tuesday issues related to GST, including pricing
and margins. Over 12 top retailers met under the aegis of Retailers
Association of India (RAI), which intends to approach the government on
key areas like including GST as a component in the product price to
avoid confusion, and clarification of taxation on packaged commodities.
"The
dealers also have to do a compliance under GST transitional provisions
for the stock left on 30th June for claiming credit of duties and taxes
paid on stock as on that date. To some, this could be a tedious and
time-consuming exercise, hence they are minimising the stock," said
Sandeep Sehgal, director tax and regulatory at Ashok Maheshwary &
Associates LLP.
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