With the Goods and Services Tax (GST) impacting everything from clothes to sweets, not many shoppers are happy with their purchases this Deepavali. Shopkeepers said sales had been badly hit this year.
A prominent restaurant owner noted that many shoppers were hesitating to eat outside after shopping. “This year, GST has sapped Deepavali of happiness,” he said.
As far as clothes sales are concerned, industry insiders said they were seeing a drop of 5-10 % this year. “As there is still time left for shopping, we hope that closer to the festival, our stores will see more customers,” said a manager at a popular clothes store.
Second thoughts
GST is making people think twice before shopping, said store owners. “Somehow, after seeing restaurant bills these past few months, I am not in a mood to buy clothes or sweets and think I am going to manage with what I have. I don’t want to pay so much tax on clothes or sweets or spend on travel for shopping,” said Srimathi Narayanan, a resident of Thiruvanmiyur.
Adyar Ananda Bhavan’s K.T. Srinivasaraja said sales had been very dull this year. “It is definitely lesser than last year. Since the bill clearly states the taxes for the Central and State governments, people are questioning the high rates. And after the Prime Minister announced a ‘Sweet Deepavali’ by reducing GST on certain items, more people have been asking questions. We hope things will get better with a council being formed to look at the hotel industry,” he said. The cap of ₹2 lakh on cash for purchase of goods too has affected certain sectors like consumer durables and gold. The electronic goods business too has been hit.
Jayam and Co.’s S. Jayaprakash said there had been a 50% drop in sales this year.
“It is really hard to ascertain the reason; maybe GST is a factor. Since there is a cap on paying cash, consumers buying TVs are hesitating since most of them like to pay in cash. As far as those in the low income bracket are concerned, their loan applications are being rejected since they are already paying EMI for most of their salary,” he said. Many customers, who want to buy gold this festive season are still hesitant to visit shops as they are unaware of the changes in notifications on reporting transactions above ₹50,000.
Until last week, jewellers were required to report on such transactions as per the Prevention of Money Laundering Act (PMLA). This reportedly deterred several customers from buying gold as it required them to produce their PAN and Aadhaar cards. Sales plunged to 30% of usual volumes due to escalating prices and new limitations
Norm relaxed
Following efforts of the All India Gem and Jewellery Trade Federation and Madras Jewellers and Diamond Merchants Association (MJDMA) , the limitation was withdrawn. N. Ananthapadmanabhan, regional chairman of the federation, said though business has picked up since Saturday after the notification was withdrawn, business had still not touched the usual festival levels. Several showrooms had only 50% of the usual footfall, he added.
“People have accepted the levy of 3% as GST. But several customers made only purchases of lesser weight. We hope business would get better as Deepavali is around the corner,” he said.
Those customers who make purchases above ₹2 lakh cannot make cash transactions. S.Shanthakumar, secretary of MJDMA said customers would have to purchase through debit cards. Business has been dull after the levy of GST.
Jewellers said they sometimes allow splitting of bills when the value of purchase crosses ₹2 lakh to retain regular customers.
