After the implementation of new indirect tax regime in the country, the government allowed to traders that they can sell their products by pasting stickers on old MRP’s, initially it was allowed only for 3 months later it had been extended by the government to 31st December 2017. Now the trade organizations have been demanding to be extended the dates till 31st March 2018. If the government do not extend the dates, there will be stiff competition in the market by reducing the prices to clear the available stock. To a large extent, the large companies have sold their closing stock. The remaining stock will be sold by providing attractive discounts offers
According to the traders association, nearly Rs 6 lakh crores old stock has been available in the market – in which old MRP is mentioned. But after the implementation of new indirect tax reform, the prices have changed due to the changes in GST rates. There might be a chance of competition to sell these type of products.
There may be two reasons to clear the available stock– the first one is that the goods purchased in old tax regime which is unbilled and the traders will get the input tax credit on the old stock when the goods sold within 6 months of GST implementation. In this case, the burden to clear the old stock would enhance.
The second one is that The last date of putting a sticker on old MRP is 31st December, which is very near. If the dates have not been extended by the government then the remaining stock will be compelled to sell in losses.
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All retail chains and shopping malls are preparing for a Mega Sale around the year-end and the reason is well-known disruption caused by GST. one of the prominent motives behind the year-end sale is that if there is no receipt for the goods purchased before July, then after six months, there will be no transitional credit facilities for the tax paid.
As per the media reports, the sale in this festive season was weak and there are leftover goods in the storage. Therefore, it is expected that the big companies and wholesale shopkeepers can offer big discounts on products this December.
In this mega sale, Branded clothes, toys, and kitchen appliances can be offered at 50% discounts. Some related sources have informed that the customers can get a chance of ‘Mega Sale Clearance‘ this year and retailers can sell the products at original price or less than nominal rates.
Read Also: Goods and Services Tax Impact on E-commerce Sector in India
The anonymous company CEO has told the Economic Times in a conversation that if retailers and wholesalers do not receive the solution of their problems related to GST, then they have to sell the stocks before the end of this year. He said that kitchen appliances, branded shirts, and handcrafted items are expected to be sold out at big discounts.
According to legal experts, strict GST rules and regulations can hurt the basic rights of businesses. Many retailers have to sell out the products on which they have paid sales tax, and excise duty by December end 2017. If they don’t do this, they will not be able to avail transitional credits for them.
Tax experts say that the government will soon find out the solution to this problem. The matter is too serious as without receipt unsold goods cannot get transitional credit benefits. Apart from this, the traders have sold fewer stocks in last three months. It is expected that the government can increase the time-limit to sell out such goods.
