June bonanza: retailers offering deep discounts to beat GST

Indian sellers usually reserve deep discounts for the Diwali season. But with the rollout of Goods and Services Tax (GST) only days away, discount sales on goods such as large electronic appliances, apparel, mobile accessories and footwear are picking pace across online platforms and traditional offline retail format stores.

This is because retailers are staring at lower margins on certain products stocked before 1 July, on which the net tax incidence is expected to be higher, alongside concerns over paperwork involved with existing stock.

While white goods such as air-conditioners are available at discounts ranging between 10-40 per cent, some apparel companies are offering discounts as high as 50 per cent on their products, with flash sales offering retailers an opportunity to clear slow-moving inventory.

For instance, electronic stores like Vijay Sales, Kohinoor and Digi1 are offering up to 50 per cent off on certain models or till stocks last. Snehanjali, another Mumbai-based electronic chain, is advertising its offer as the pre-GST sale with a warning that ''Prices for most electronic items are set to rise by 5 per cent''.

Electronic manufacturer Samsung is offering free DTH connection with televisions and extended warranty periods and free services with air-conditioners (ACs) and microwaves as part of its 'June Fest'.

Brands such as Puma, Bata, ONLY, Jack & Jones, Vero Moda, Louis Philippe, Van Heusen, Benetton and Polo have already begun their sales across major cities.

Retail chains such as Pantaloons, Lifestyle and Shoppers Stop are yet to come out with their formal end-of-season sale, but they have reportedly already started giving discounts on select brands in the range of 20-40 per cent.

 Online retailers Flipkart and Shopclues are running their own versions of GST sale. Flipkart Fashion Days will run for nine days, from 10 to 18 June, under which the company would offer products from 50 brands. It will also hold a 'Bid n Win' contest for customers during the nine-day sale and the lowest unique bidders will win prizes like Emporio Armani watch worth Rs13,995, Victorinox bag worth Rs15,960 and more.

With the GST on the anvil, retailers are worried that as any stock that they have procured in the last six months will not get the full set-off on the tax already paid when the transition to GST happens on 1 July, which is why they are scrambling to clear out goods.

Furthermore, dealers are worried that tax authorities might question the documents produced by them to avail credit on the transition stock, and are therefore looking to clear stock.

This week, online marketplace Paytm Mall announced a three-day Pre-GST Clearance Sale from 13-15 June, in which over 6,000 retailers sold more than 500 brands.

Bajaj Auto announced a reduction in prices of its motorcycles by up to Rs4,500 to pass on the expected benefit of GST to customers. Taxes on motorcycles will reduce in most states from 1 July, even as benefits for each state and across motorcycle models are different, Bajaj Auto said in a statement.

''This pre-GST Sale will see customers buy items including televisions, consumer durables, premium laptops and DSLRs at up to Rs20,000 cashback, while products such as Bluetooth speakers, footwear and accessories will be sold at up to 50 per cent off plus 25 per cent cashback. This sale has come at an opportune time for offline retailers who are looking to offload their entire inventory before the new tax rates become effective,'' Paytm Mall said, justifying the sale.

White goods such as air-conditioners, washing machines and refrigerators fall under the 28 per cent GST bracket, against the current incidence of 21-23 per cent, inclusive of VAT and excise duty.