Online shopping websites have also jumped on the GST-induced-discounts bandwagon over fears of suffering losses after the new tax regime is put into effect.
E-commerce giants Flipkart and Amazon India are offering lucrative discounts to clear stocks before June 1 when the Goods and Services Tax is scheduled to be rolled out. Online vendors are apprehensive that the new tax rates and rules will eat into their profits.
Buyers could see several sales for the remainder of June as WS Retail and Cloudtail - the biggest vendors on Flipkart and Amazon respectively - are trying to get rid of their inventory, a Financial Express report stated. Other sellers are also expected to offer tempting offers to clear out their stocks before GST rollout.
In its last meeting on June 3, the GST Council agreed to increase input credit to 60 per cent for products in the GST slab of 18 per cent and more. Consumer goods and electrical appliances fall under the 28 per cent GST slab.
The Council also proposed allowing 100 per cent credit in case of high-value items priced above Rs 25,000 based on the tracking of the product.
"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 carried 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 to apply for input tax credit under GST. It could turn out to be extremely cumbersome for many sellers," the Financial Express report quoted Archit Gupta, CEO of tax solution provider Cleartax.com.
Retailers claim the ambiguity on the fate of current and transitional stock under the Goods and Service tax has pushed them into clearing old inventory. Retail chains selling electronic goods are luring customers with huge discounts.
Retailers of white goods and consumer durables are already offering hefty discounts to customers as they look to clear the old stock before the Goods and Service Tax comes in from July.
Luxury car makers like Mercedes-Benz, Audi, BMW, Jaguar Land Rover and other that have manufacturing operations in India also presented hefty discounts and offers to buyers ahead of GST roll-out to pass on the benefits GST is expected to dole out to them.