GST 2.0: After record sales during Navratri, all eyes on Diwali  

The cuts in the goods and services tax (GST) rates have fueled festive season sales with brands and retailers reporting growth ranging from 25% to 100%. Ongoing transition problems are expected to ease in the coming weeks as new inventory enters the market, and sales are expected to get a further boost in the upcoming Diwali period.

“India’s consumer economy witnessed its highest Navratri sales in over a decade, propelled by the Modi government’s NextGen GST reforms that reduced tax rates and made products more accessible,” said a government source.

According to the Confederation of All India Traders (CAIT), traders are gearing up for a record-breaking festive season, with Diwali sales expected to cross an all-time high of Rs 4.75 lakh crore, driven largely by Indian-made goods. A survey conducted by it among trade associations in 35 cities across different states revealed that the PM’s call for Swadeshi and the GST cuts are expected to give a boost to Diwali sales. “The recent massive GST rate cut, which has come as a festive gift for both traders and consumers, giving a significant boost to sales across categories,” said Praveen Khandelwal, Secretary General, CAIT.

Effective September 22, the GST rates on several goods and services have come down as the government moved to a new rate structure with two main rates of 5% and 18% while doing away with the 12% and 28% rate.

Carmakers and consumer durable firms, that have announced price cuts to reflect the lower GST rates, have already registered a sharp uptick in sales and expect that the third quarter of the fiscal could see sharper sales growth as the transition issues settle down and customers who had postponed purchases in the second quarter buy their desired goods.

“FMCG sector has seen an enabler in the form of GST rate cut, which is likely to fuel consumer wallet, where companies with better execution are likely to benefit,” said a note by Emkay Global Financial Services. “While select players have tried to support trade to keep it afloat, most of our coverage companies are likely to see five days of sales impact, where primary is expected in the third quarter,” it further said.

Several small retailers, who had so far not reduced rates on existing inventory, are now stocking up on new goods for Diwali sales and are expected to offer new prices in sync with the GST rates. The government too is keeping a close watch on price trends and has also flagged issues around e-commerce sales in the past where prices of certain items had increased post the GST cut. Industry sources and officials point out that most of the transitional issues are likely to settle down soon.

The National Consumer Helpline (NCH) has so far received 3,981 GST-related dockets, comprising 31% queries and 69% grievances. A major share of grievances pertained to milk pricing while another substantial category of complaints related to electronic goods purchased through e-commerce websites, said an official release.

E-commerce operators too are working with sellers to ensure prices of goods reflect the new GST rates. “Amazon has implemented mechanisms to help sellers transition smoothly to the new GST rates. Sellers remain responsible for ensuring the correct GST rates and Product Tax Codes (PTCs) are applied to their products, and Amazon has proactively supported them with tools and guidance to review and maintain accuracy across their listings. Wherever possible, Amazon has automatically updated GST rates and PTCs on sellers’ listings for select product categories,” an Amazon spokesperson said.