Every year, the Tamil month of Aadi — occurring in July-August — rings in a shopping season. This year, Aadi shopping has started early.
Firms across Tamil Nadu including retail chains, consumer durable firms and furniture shops are doling out steep discounts to clear inventories ahead of the Good and Services Tax (GST) roll-out. Some of them are offering discounts up to 50%.
At Makoba, a high-end stationery shop in Chennai, watches are being sold at 25% discount. Its co-founder, Nitesh Jain, said: “There is a change in tax slabs for watches so we are giving 25% discount. Currently, watches fall under 14% slab and post-GST it will be 28%.”
Retailers selling home appliances, consumer durables and digital products including laptops have also slashed prices depending on the product. B.A. Srinivasan, CEO of consumer durable firm, Vivek Limited, said: “The industry feels that prices of many products might go up so we are giving good offers for our customers.”
At Sun Computers, Tiruchi, branded products are being sold at a 5% discount. Its proprietor S. Saravanan said, “We are offering 5% discount on laptops, desktops and printers. We want to liquidate the stock by offering discounts before the GST roll-out happens as this would help in avoiding paying extra tax on the existing stock,” he added.
Bouteak Crafted Décor, a fabric and furniture shop in Chennai, is giving away products at 40% less than the price tag.
The firm’s marketing manager Ajitha Kumar said: “We wanted to give our products at an affordable price to the consumers. Post GST they would have to spend more money from their wallets,” she added.
Special offers
Even branded garments are up for sale at special offers. Chairman of Southern India Mills’ Association M. Senthil Kumar said so far branded garments attracted 12% duty on 60% of the value. So the MRP was inclusive of the duty and the retailer did not have to pay any tax.
However, under GST, the rate is on the unit value billed. Garments and made-ups priced above ₹1,000 a piece will attract 12% duty and those priced below ₹1,000 a piece will have 5% duty. This would mean that retailers who have stock with them will have to collect GST on the goods with them after July 1. So, retailers want to clear the stocks.
More garment retailers are expected to offer discounts in the coming days before GST is rolled out. A few retailers, however, said firms are capitalising on the name GST.
The proprietor of a mobile firm said: “Only products which are stuck on shelves for a long time are being doled out at discounted prices. The consumer has still not understood GST well and how do you expect them to shop now,” he questioned. “This is just a normal extended sale under the disguise of GST,” he said.
According to Harish Bijoor, Brand Expert and CEO of Harish Bijoor Consults, for the retailer, GST is Grand Sale Time!
Old stock in market
Ditto was the opinion of K. Vaitheeswaran, a lawyer and tax consultant.
He said: “The current sale which is happening is stock clearance sales by dealers. The stocks which are more than one-year-old (from the cut-off date of July 1) do not get any benefits under GST.”
This kind of stocks would have already paid the taxes under the current tax system (like excise duty, value added tax). Yet, these stocks would have to pay the applicable rates under GST if sold after July 1.
He explained: “So dealers are trying to get rid of these stocks now through discounts. For stocks which are one-year-old or less there is an option to claim credit (get money back to an extent on tax paid) provided documents are maintained properly. All the talk about goods getting cheaper or costlier is all speculation in the market. GST is going to be neither too good nor too bad,” Mr. Vaitheeswaran said.
(With inputs from M. Soundariya Preetha in Coimbatore and R. Rajaram from Tiruchi)
