GST fears: Rush to clear stocks creates buyer’s market

AHMEDABAD: Expecting most consumer products including televisions, refrigerators and air conditioners, among others, to come under the 28% slab of GST, dealers are offering big discounts in a hurry to clear stock, before prices rise.
On the other hand, the expected 5% rise in prices after July 1, and current 10%-50% discounts being offered by dealers are compelling consumers to make their purchases before the GST rolls out.Overall, an unseasonal retail boom is on thanks to GST fear.
The pressure to clear stock is highly visible. In last week’s meeting, the GST Council raised the input credit tax on goods currently taxed at 18% to 60% for GST liability against excise duty paid on stocks remaining with traders and retailers.
“There is a sudden rush to clear stocks as many dealers don’t understand how input tax credit will work,” said Paresh Vora, an electronics dealer and distributor in Naranpura.
Sunil Motwani, vice president, Electronics Dealers Association – Ahmedabad, said, “Most are trying to clear stocks to avoid double taxation and embrace GST with a fresh slate. Discounts will therefore vary, depending on the life of the old stock and the cost price.”
“The demand for televisions is good and so are the discounts, which go up to 50% on certain models. Depending on the product category, discounts in the range of 10% to 50% are being offered,” said Bankim Mehta, general manager of an electronics retail outlet at Prahladnagar.
While some discounts are being offered directly by manufacturers, the rest are being offered by dealers and distributors. “While sales may look buoyant at the moment, clearing stocks might impact sales in July for the initial few days,” said Vora, the dealer from Naranpura.