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  • Category: Miscellaneous

    Non perishable product sold at a discount of 38 percent below MRP- GST effect?

    Yesterday I was shopping in a local supermarket. In the detergent powders shelf there was a notice that 'so-and-so' brand detergent powder with MRP Rs.242 offer price Rs 150. The discount is Rs.92 which works to a whopping 38 per cent for a non-perishable daily used item. To be frank, I fell victim to that offer gimmick and bought two packets of that product. I am sure the shop would not have sold it for loss because it is a non-perishable item. At the maximum it might be at no-profit, no-loss. I wonder how much would be the margin in normal days.

    Or can it be due to the GST effect? I am not able to understand because GST for detergent powder is more than the current rate. So the new prices will increase by about four to six percent due to the increase in tax. But then why the existing products should be sold at a discount of 38 percent?

    Please post your views.
  • #601977
    The big departmental stores and malls are duty bound to shift to GST regime from 1st July , so they have to get rid of old stock even at the loss and go for new pricing and that would be effective from midnight itself. If the traders sell the old stock which are having old pricing, no body would purchase more. If the same products are sold at the discounted price, the mall can clean up the racks and the customer delights to have cheap products for one day. Nevertheless we can get the right picture as how the things would move after 1st July and that would be a fresh for every one of us.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #601980
    There are some items which are kept in lowest tax bracket in the forthcoming GST regime. If detergent is one of them and its price is expected to fall significantly than some shops may try to reduce the present stock in a fast mode for which the only way is reduce the prices more. It could be a possibility for your yesterday's shopping experience.

    The true colors will be only revealed after things will be more clear by the next week.

    In business there are so many factors affecting the ultimate retail price to the customer and how those factors are behaving in GST regime is to be seen.

    But gain from one item will be nulled by increase in service tax at so many places. For last 2-3 days I have got a number of SMS from banks, LIC, credit card company etc regarding increase in service tax from 15 to 18%.

    Knowledge is power.

  • #602001
    I think there will be some problem with taxation of the stocks left over after 30-06-2017. The retailer may not be put into any difficulty but for some procedural problems. The GST on detergent powders is enhanced than what it is now.
    " Be Good and Do Good "

  • #602016
    Tax issues are always a complex thing to understand and if tax on detergents is proposed to be more in the coming GST it is not understood what is that overall mechanism that shops are starting to sell it in less price.

    There are so many items on which tax is in general increased and only coming time will tell if traders are transparently extending the benefits or losses to the customer or not.

    Thoughts exchanged is knowledge gained.

  • #602022
    It may not be a tax problem alone. People are under confusion. They are not very clear about the effect of GST. Different versions are there. Somebody say it is good for middle and lower class families. Some says rates will increase. Taking this confusion as an advantage the second quality stock which is to be returned to the agent before 30th of june2017 to finalise their accounts are being sold at lower price without telling anything about it. Thus quality of the product may be one reason.
    It is sure that even though the rate of tax increases it will not be very high making the shopkeepers to sell at such a lower price.
    Another reason for this may be duplication. The product they are selling may be a duplicate brand and they may be getting at a very lesser price.
    We have seen many times in cloth shops offering heavy discounts for clearing their stocks. May it is a clearance sale.

    always confident

  • #602028
    @ 60202230 , it is a popular brand of a reputed manufacturer. It was selling near to MRP price till last week.

  • #602042
    Today I went to a mall in Bangalore. There I could see the shops showing display cards " 50% off" on readymades and foot wear. Then, I went to a Royal Enfield Motor cycle show room and could find 40% off for all the products available except the Motor Bike. I asked the show room manager as to what would be the GST effect on RE Motor cycles. He said it is only Rs. 3000/- more than the existing rate. Really there is some confusion as to what would be the correct rate after the implementation of GST.
    No life without Sun

  • #602064
    I feel that it is a case of 'present fears are less than horrible imaginations'. For any change there will be some initial resistance and confusion. Then by and by gaining experience and feedback and doing necessary amends and changes things will get stabilised. In the case of GST also it will be like that.

    I am getting SMS from banks and mobile and internet service providers that the GST rate will be 18 % from July I st whereas as of now the cumulative of all the components is 15%. So there will be an increase of 3% in the charge we have to incur for mobile , internet and banking from no. It is our experience that when price has to be increased it is done immediately and when it has to be reduced, there is no hurry and will not happen at all.

    So practically what is going to happen is there will be only increase in cost, charges and bills immediately. For those items where tax is reduced or exempted, the price will be kept same by one or another justification. It may need anew mechanism to monitor and prevent artificial price hike and profiteering.

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