Retailers which are learned from the upcoming GST are offering 20-40 per cent discounts on white goods or electronic appliances, including television, AC, refrigerator and so on to clear the available stock and minimize the losses, before the implementation of Goods and Services Tax (GST) i.e., 1st July.
Televisions, washing machines, air-conditioners are now available at affordable prices, just because retailers are offering discounts on them. Discounts of electronic- appliances may vary and it depends on how much the stock is older and the cost price. Retailers say that they would have to bear losses on available inventories, nearly 6 percent and 14 percent of unsold stock bought before the month of May and one-year-old inventory respectively. Retailers are not eligible to avail the input tax credit on the old or available stock.
In the GST Council Meeting which was held on 3rd June, enhanced the excise credit from 40 percent to 60 percent. The electronic good retailers are offering discounts nearly 10-15 per cent on maximum retail price (MRP) and it will now shoot up -about three-fold.
Although well- renowned electronic brands such as Panasonic, Videocon, Samsung, and Hitachi is also providing promotional offers such as gifts, extended warranties on electronic appliances to enhance the sales of the outlet. Two senior industry executives said that distributors and retailers are trying to clear the available stock instead of purchasing new stock.
Pulkit Baid, Director at Great Eastern, renowned electronic retailers of the East, said, “It’s almost a mid-year Diwali for consumers in June, as most retailers will be doling out huge discounts to clear inventory before GST is rolled out. Retailers want to liquidate their entire stock as they cannot bear the load of the remaining 40 per cent central GST which will not be credited to them on unsold inventory,”
Nilesh Gupta, the Managing Partner of Mumbai-based electronics chain Vijay Sales, said: “As retailers are focusing on reducing their inventory, they have already started running promotional schemes to drive sales. Depending on the product category, we are running discounts in the range of 5 to 50 percent.”
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The prices of consumer electronic appliances are subsumed to shoot up by 3-5 percent after the introduction of GST due to increase in taxation. Mumbai based leading electronic retail chain, Kohinoor is providing around 40 percent discounts on electronic items. The Director of Kohinoor Retail Chain, Vishal Mewani said, “Most of the goods on discount especially cell phones and LED TVs are the end of the life models and we are treating them as a stock clearance. For other goods, the offers are a sign of desperation,”
In the last GST Council Meeting which was held on 3rd June, GST Council Members agreed to enhance deemed credit to 60 percent for products falling under the slab rate of 18 per cent under GST. Televisions, kitchen appliances, white goods and small appliances are kept under the 28 percent slab rate in GST.
The Council also approved 100 percent input tax credit in high-value items priced at Rs. 25,000, it is based on the tracking of the product and in fact without providing the details of the documents and the actual payment of excise duty. Kamal Nandi, Business Head & EVP, Godrej Appliances, said: “We are focusing on giving our trade partners sell-out support so that they can reduce their inventories by this month-end.”
