Goods and Services Tax (GST) can bring huge discounts before its introduction impelling the mobile manufacturers and retailers to remove their old stock from July 1. With the introduction of GST, the price of mobile handsets can be increased due to tax factors. It is speculated that some handset brands can offer discounts on both online and offline basis along with retailers who would cut some of the prices.
Navendra Singh, senior analyst, International Data Corporation (IDC) India, has cleared that from the middle of June to the end of July, discounts can be given on behalf of numerous mobile brands. They would like to remove old stock before newer handset models with increased pricing. Last week, the GST council has fixed 12 percent rate on the phone for cellular networks and its manufacturing, making most of the smartphones expensive by 4 to 5 percent.
Counterpoint research has expected that there will be a significant reduction in the prices of the handsets accounting up to 10% at the end of June. GST rates will be effective from July 1 and if the prices are increased then it will burn pockets of the customers. Tarun Pathak, associate director of Counterpoint Research, told that the brands have already started sending the stock to the distributors.
However, due to some uncertainty regarding the GST, distributors are availing stock and avoiding sending them forward to the retailers. They said that by the end of June, retailers can give a discount of 10-15% because they do not want to keep the stock which can be expensive in a few weeks.
Read Also: Goods and Services Tax Refund Procedure Under Goods and Services Tax India
Less stock is being typically sent to distributors in the May-June quarter because retailers want to clear the existing stock before the July-September quarter sales. The principal analyst & GM Faizal Kawosa of the research firm CMR said that discounts can be given by those companies whose sales are not good yet. These companies will try to reduce their prices and increase their sales and acquire market share.
The country’s top online retailers Amazon and Flipkart gave huge discounts on smartphones in their recent sale. Smartphones have a large stake in the revenues of these companies. Amazon’s sale was between May 11-14 while Flipkart sale lasted from 14-18 May.