Moneycontrol
Jun 19, 2017 04:00 PM IST | Source: Moneycontrol.com

Flipkart, Amazon & Paytm line up discounts before GST rollout

The present ‘sale’ is largely driven by the imminent roll-out of GST.

The Goods and Services Tax which comes into effect in just 15 days has triggered retailers into giving colossal discounts to clear their inventory before the start of a new tax regime.

E-commerce ventures are looking to clear stocks lying in warehouses as the new tax regime will result in tax burden. Sellers, both from online and offline platforms, cannot claim input tax credit for goods that have been purchased but sold after July 1.

Online portals have thus lined up sales across segments ranging from apparel, footwear, electronic accessories, mobile accessories, premium watches, handbags, leather products, and health and beauty products.

Under the new GST rules, sellers can avail up to 60 per cent input tax credit on items which attract between 18 percent and 28 per cent GST. Further, 100 percent input tax credit can be claimed against excise duty for items valued over Rs 25,000.

Under the sales, white goods i.e household electronic appliances are up for grabs at cheap prices with discounts of around 20 to 40 per cent.

Discounts for some goods are exceeding 50 to 60 per cent. The average discount stands at around 10 to 15 per cent. However, it is expected to rise three fold as the midnight of June 30 approaches.

The huge discount on consumer electronics can be explained by prices of consumer electronics likely going 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.

Smartphone makers have advised distributors to liquidate stocks on a priority basis. Industry leaders like Samsung, Micromax and Nokia have conveyed to the retailers that compensation will be limited only to those products billed to trade 30 days before GST commence , a discount of up to 10 percent is expected.

Archit Gupta, CEO and founder, Cleartax.com told Financial Express that despite the availability of input tax credit, it makes sense for sellers to offer discounts and clear their stock due to compliance burden if they carry over the stock into July. To get input tax credit on the excise paid, the seller would have to identify the eligible stock and gather all the relevant documents, which could be extremely cumbersome for many sellers.

Paytm

Under the Paytm Mall pre-GST clearance sale, the e-commerce portal, hosting 6000 retailers across more than 500 brands, is offering up to 80 per cent off on products including TVs, laptops, phones, cameras, air-conditioners and refrigerators. The clearance sale also offers a cashback of up to Rs 20,000 on DSLRs, televisions, laptops and air conditioners.

Meanwhile, top devices like the iPhone 7 are retailing at heavy discounts. For the 128GB iPhone 7, a handsome 24 per cent discounts awaits customers; the iPhone 7 32GB, on the other hand, is retailing at Rs46,182 – almost Rs 14,000 less than the MRP. The iPhone 6s as also been discounted by Rs 10,000 during the brief period.

In addition to this iPhone galore, Paytm is further offering cashback on the discounted prices. The iPhone 7 (Red) is also retailing almost Rs 10,000 lesser than its original tag. On Paytm, there are sizeable cashback of up to Rs 20,000 on Lenovo laptops, DSLR cameras and Rs 10,000 on refrigerators, TVs and air-conditioners.

Flipkart

Up next Flipkart – India’s e-commerce giant has already initiated a fashion sale, which will last for the next couple of days. Another separate contest “bid-n-win” has also been running alongside it and will conclude on June 18 under which several prizes like Emporio Armani watches worst Rs 13,995 and Victorinox bag worth Rs 15,960 can be won.

Also, Flipkart is giving up to Rs 2000 off on exchange offer for newly launched Moto Z2 Play and Rs 10,000 off on exchange for Microsoft Surface Pro 4. There is up to 25 per cent off on printers and monitors.

Amazon

Next in line is Amazon, which is giving a cashback of 16 per cent on iPhone 7 and 7 Plus during its Big Sale. A 35 per cent peak rebate on monitors and desktops is also in place. From June 23-June 25, Amazon will offer discounts up to 80 per cent on clothing, reported ET.

Amazon is giving up to 35 per cent off on desktops and monitors. Those buying iPhone 7 32GB, Jet black colour  from Amazon can save up to Rs 15,750 and need to pay Rs 65,450 against the original price of Rs 82,000. The company is giving a cash back of up to Rs 16,000 on iPhone 7 Plus and iPhone 7. There is a discount of Rs 13,501 on LG G6  and Rs 28,560 off on LG V20. Then there is also a discount of up to 80 per cent on mobile accessories like original Redmi 4 cases that are selling at Rs 349 , Intex powerbank, headphones, VR headsets and more.

Online drug marketplace 1mg has been doling out discounts @ 20 per cent on its medicines in a bid for making customers stock medicines ahead of a possible shortage due to GST.

Shopclues is organizing seller summits in different cities.

All e-commerce companies have been engaging with merchants on their platform to ensure a smooth transition to the new taxation system.

According to LegalDesk, the current Model GST Law has included a separate chapter on e-commerce transactions which states that Electronic Commerce Operators engaged in the supply of goods and services through online platforms/websites are required to collect tax at source and deposit the same with the government.

Such TCS or Tax Collection at Source has to be made to the supplier, either in cash or any other mode, at the time of credit of amount payable to the account of the supplier or at the time of payment to the supplier.

Despite the tax exemption being available to small service providers, based on their turnover, it appears that the goods and services tax will still be needed to be collected at source from small suppliers by the e-commerce operators regardless of their turnover. Furthermore, whether reimbursement of the tax paid would be available to the small suppliers is still not clear.

While the brick-and-mortar and online market retailers make desperate attempts to cut down losses and clear inventories, it is the customer who should benefit this brief period, following which experts predict an economic slowdown.
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