PUSHPAK SHAH, a resident of Ghatkopar, is excited about utilising his savings from the last six months to buy an iPhone 7. He plans to invest the amount by next week before the Goods and Service Tax (GST) rolls out in the state on July 1. “I am afraid that my savings would not be able to match up to the new rates of the phone after the GST kicks in. As the price of consumer electronics are likely to go up by at least 5 per cent, I would like to be an early bird. Also, I would shop at popular online sites to avail a higher discount,” he said.
For many like Pushpak, this is the best time to purchase the products of their choice as many stores and online portals have announced high discounts to clear their stock before the GST kicks in. While some stores have brought in surprise discount sales, others have simply begun their end-of-season sales earlier than usual. “We are told by our advisers that our products will become more expensive after July 1. We will soon dole out discounts up to 15 per cent to clear as much stock as possible before that,” said the proprietor of an optical shop.
However, not all stores are receiving as great a response to their sales. A Forever New store in the suburbs had to announce the sales just three weeks after their mid-season sales and is yet to see an increase in footfall. “Most of our customers have just completed their shopping during the mid-season sales. They will not come to shop again so soon. We have seen almost a 50 per cent dip in purchases this year as compared to last year,” said a staffer at the store.
For the retailers, it is not just about a higher price after GST but also the complexity of the whole procedure that is pushing them to dole out huge discounts. “We have already paid value added tax (VAT) for the old products and now we will have to pay GST as well. The compensation that we will receive will not be the full amount and we will receive it only six months later. Also, the manufacturers are expecting the new tax regime to make our products more expensive. This will cause a dip in our sales at least for the initial few months. So, we prefer to give out discounts to our customers, which might cut into our profits but not really give us losses,” explained Nilesh Gupta, managing partner, Vijay Sales.
Some stores are preferring to play it safe till the changes are witnessed. “Fearing the higher prices of electronic goods later, I believe consumers may rush into the shops in the next 15 days. I would not want to risk my profit margins at this crucial time,” said Akshay Marathe, manager of One Mobile shop, which has not offered any discount on any of the goods.