Pre-GST Discounts: Why and where?

The D-day in the history of Indian indirect tax regime is less than a week away now and ahead of it, all the business players have started giving mega discounts to clear off their inventory before starting their new innings with GST. Not only the retailers at the physical market but even the e-commerce traders have started giving huge discounts and advertising about their deals through emails, messages and television ads.

What is the reason behind this? Are the Indian business houses celebrating the coming of this new morning? There can be many answers to these questions, depending upon how a person relates business and the new tax regime.

Well there are multiple reasons why companies wish to clear old inventory, let us understand them:

On all accounts, most companies are quaking, fearing the huge increase in compliance costs and paperwork that GST will bring. There are other basic reasons as well like, future price expectancy of goods, compliances that are more stringent, complex tax rules etc.

How a business mind thinks in such a situation?

The business executives keep in mind the future expected prices of their goods when GST comes with its full colors. There can be only two possible conditions i.e. whether the prices will go up or the prices for their goods will fall.

If prices are expected to fall under GST, then they will design a discount in such a way, that even the discounted price is higher than the price under the GST. However, this is just an economic reason to sell the stock.

Another important reason is anti-profiteering. This involves passing of tax benefit to the customers that have taken place due to a reduction in tax rates. Not following these rules can lead to huge penalties and even cancellation of registration.

If prices are expected to go up under GST then, as per the present situation when there is slow economic growth in the economy, a slight change in the prices of goods will defer the purchasing needs of the customers. Therefore, this time comes as a pre-Diwali Mela for all the traders, when they decide to get rid of their old stock.

On a more conscious note, these discounts have triggered, as there is a lack of understanding regarding the position of stock that was present before the GST regime and left unsold.

All business houses wish to avoid any kind of complexities that may arise post-GST and hence wish to earn more premium during this period. For customers, this is party time as there is Discount Monsoon. So enjoy!

Where we can avail these discounts? – Products and discounts

Let us explore some of the products that are at huge discounts:

White goods – electrical home appliances, etc.

• Discount of 20%-40%
• Samsung, Panasonic, Hitachi, Videocon and LG India have come up with promotional offers, gifts, extended warranties, EMI schemes to boost sales.
• Free DTH service along with TV sets, multiple offers.
• Cashback incentives on Paytm.
• Huge discount offers on Flipkart and Amazon.

Online Market – Great deals

• Big sale days, contests and cashback are a huge charm.
• Huge discounts on clothing and fashion items.
• Heavy price drop- mobile phones, laptops, cameras, etc.
• Big discount on iPhone 7 and even iPhone 6s and other Apple products.
• Freebies on various fashion and electronic products.

 Offline Stores – Physical Marts

• Even offline stores are not behind in giving great offers.
• Big Bazaar giving cash back coupons.
• Buy one get one and other such deals at various offline stores like Peter England, Van Heusen etc.

     Automobiles – Cars and bikes

• Price benefits, free insurance, lower interest rates on installments, extended warranties and roadside assistance.
• Mahindra is also offering discounts on these models: Rs. 27,000 on Scorpio, Rs. 61,000 on TUV300, Rs. 72,000 on KUV100 and Rs. 90,000 on XUV500.
• Maruti Suzuki offering a discount of Rs. 25,000 to Rs. 35,000 on Alto and Swift.
• Datsun is packaging deals with free insurance and reduced interest rates.
• Hyundai is offering price benefits in the range of Rs. 25,000 on Elite i20 to Rs. 2,50,000 (on Santa Fe), Rs. 45,000 on Eon, Rs. 62,000-73,000 on Grand i10, Rs. 80,000-90,000 on Verna and Rs. 25,000 on its new XCent.
• Ford is offering discounts of Rs. 20,000­30000 on EcoSport and Rs. 10,000­ 25,000 on Figo and Aspire depending on the variant.
• Honda Cars India assures compensation to buyers in the event of a decline in vehicle prices after the implementation of the GST.
• Volkswagen and Nissan have also slashed prices on various models.
• Mercedes­Benz India has reduced prices by up to Rs. 7.5 lakh of its locally assembled cars and SUVs. Its nine Made ­in India models such as CLA, GLA, C­Class, E­class, SClass, GLC, GLE, GLS and Mercedes­Maybach S500 get the price benefit from the GST and get more affordable.
• Isuzu Motors India is offering discounts of up to Rs. 1.5 lakh on its models such as the newly launched MU­X and the V­cross.
• Audi has slashed prices of its models in India by up to Rs. 10 lakh till June 30.
• JLR has also slashed the price of three of its models in India by up to Rs. 4 lakh.
• BMW is offering customers financing at 7.90%, complimentary service and maintenance of three years, free insurance for the first year, and assured buyback for up to four years.
• Bajaj Auto Ltd announced a reduction in prices of its motorcycles such as CT 100 and Dominor 400 up to Rs. 4,500.