Highlights

• Amazon, Flipkart and Paytm offering discounts upto 40 per cent on various electronic items.
• Samsung, LG, Panasonic and Videocon have also come up with promotional offers.
• Prices of consumer electronics are likely to go up by 3-5 per cent once GST is implemented.

Retailers are offering hefty discounts on electronic goods in both online and offline platforms.

Diwali has arrived early for consumers as retail stores and e-commerce sites are offering big discounts on electronic products such as television-sets, refrigerators, air-conditioners and washing machines among others ahead of the GST (goods and services tax) rollout on July 1. Typically it’s the festival season starting around October that showers customers with hefty discounts from various retailers and brands.

But why are offline and online marketplaces like Amazon, Flipkart and Paytm offering discounts upto 40 per cent on various items in June. Read on to find out the reasons.

1. Prices of consumer electronics are likely to go up by 3-5 per cent once GST is implemented as most of them fall under the 28 per cent tax slab, which is the highest bracket and a jump from the current 23 per cent tax rate.

2. Most retailers have announced these discounts in a bid to to clear inventories ahead of the GST rollout.

3. Retailers are likely to make a loss of about 6 per cent on unsold stock purchased before May, and about 14 per cent on inventories that are a year old, against which input credits cannot be availed.

4. Under the GST regime white good manufacturers are allowed to avail some input tax credit on inventories. The taxes paid by a manufacturer, while buying raw materials and/or services, are known as input tax. Most retailers, however, want to start with a clean slate to avoid complications.

5. The GST Council has increased the input credit tax on goods taxed at 18 per cent or above to 60 per cent for the GST liability against excise duty paid on stocks remaining with retailers. Electronic goods such as TV, AC, refrigerator etc. fall under the 28 per cent GST slab.

6. For items priced at over Rs 25,000, 100 per cent input credit will be available, based on the tracking of the product (even without documents detailing the actual payment of excise duty). However, there is ambiguity on the definition of tracking and the industry is awaiting clarification on it and whether it’s on the base price, maximum retail price (MRP), or the market operating price. Hence the desire for a ’clean slate’ on part of the retailers and traders.

7. It’s not just retailers and traders, even consumer electronic brands such Samsung, LG, Panasonic, Videocon

 16 Jun 2017, 05:26 AM