Moneycontrol
Jun 16, 2017 08:21 AM IST | Source: PTI

Companies offer pre-GST discounts to clear stock

It is turning out to be bonanza time for consumers as apparels, car manufacturers woo them with attractive discounts ahead of implementation of the GST next month.

Companies offer pre-GST discounts to clear stock

It is turning out to be bonanza time for consumers as companies, ranging from apparels to car manufacturers, woo them with attractive discounts ahead of implementation of the GST next month.

While apparel manufacturers are trying to liquidate old stock ahead of the new tax regime, automobile companies are attempting to draw buyers to showrooms with attractive limited period discounts of up to Rs 2.5 lakh across a range of vehicles sold in the country.

Brands such as Levi's, Reebok and Woodland are currently on a clearance mode offering high discounts.

"The retailers do not want to keep much of stock because the remaining stock will move to the GST regime and the margins would then vary. No brand can sell the entire stock before July 1 but they are trying to do the maximum," Woodland Worldwide MD Harkirat Singh told PTI.

He said the GST has come just ahead of the usual seasonal discount and the brands have slightly advanced their offers.

An employee at an exclusive store of Levi's in New Delhi said the company sent instructions to "clear old stock by offering these discounts as soon as possible because of the GST".

Future group multibrand retail format Central's Chief of Marketing & Head of Customer Loyalty Jitendranath Patri said discounts have also been offered keeping in mind Ramzan shopping.

The GST Council has decided to tax man-made apparel up to Rs 1,000 at 5 per cent, while those costing above Rs 1,000, will attract 12 per cent. At present the total tax incidence is around 8 per cent depending upon the states.

On the automobiles front - Maruti Suzuki, Hyundai, Honda, Nissan, Mahindra and Mahindra and Ford India - have all come out with different schemes that are valid for June only.

"We are giving price protection to the customers for cars retailed from June 10 to June 30 which means that customers will buy the car at pre-GST price now. Post GST implementation whatever the difference in ex-showroom price it will be returned back to the customer by the dealer," a Honda Cars India spokesperson said.

Industry analysts said the companies have been forced to come up with the discounts as potential customers have held back on purchases expecting prices to come down after the implementation of GST. Under the GST rates, cars will attract the top rate of 28 per cent with a cess in the range of 1-15 per cent on top of it.

While small petrol cars with engine less than 1,200 cc will attract 1 per cent cess, that with a diesel engine of less than 1,500 cc will attract 3 per cent cess. Large cars with engine greater than 1,500 cc and SUVs with length more than 4 metres and engine greater than 1,500 cc will attract a cess of 15 per cent.

The Consumer Electronics and Appliances Manufacturers Association (CEAMA) said discounts are being offered as traders are worried over cash flow.

"The nearing of GST has caused a discomfort amongst the traders as they are worried over the cash flow that might occur during GST implementation therefore, offers are being introduced," said CEAMA President Manish Sharma.

He further said that businesses will be normalised over the next two-three months of operations.
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