PANAJI
Consumers will see lower prices on air-conditioners, dishwashers and large television sets from September 22, when the Goods and Services Tax (GST) on these appliances is cut from 28 per cent to 18 per cent.
But while buyers stand to benefit, dealers are worried about losses on stock already purchased at the higher tax rate.
Under GST rules, the tax is applicable at the time of supply, not at the time of purchase -- which means goods already lying in showrooms or warehouses will attract 18 per cent GST when sold after September 22, even if they were originally billed to distributors at the higher 28 per cent rate.
However, there’s a breather. “Dealers need not rush to clear their inventory, even if they have purchased at old rates. They can continue to sell their old stock at the new rate without losing input credit, provided the tax was correctly charged when they purchased it,” a GST official explained to The Goan.
The GST Council reduced the levy on air-conditioners, dishwashers and televisions of 43 inches and above from 28 per cent to 18 per cent. Industry estimates suggest that buyers may save between Rs 1,500 and Rs 2,500 on average, depending on the model.
“This is welcome for buyers, especially in the festive season. But distributors are worried because they purchased inventory at the higher tax rate. Unless manufacturers adjust the difference, we could face losses,” said one of the distributors.
In fact, the official further stated, dealers will not face any losses, explaining that during any fluctuation in prices, the adjustments are made. “Wherever the goods have MRP, the manufacturer will have to issue the revised MRP chart. If decreased, the MRP drops and vice versa. They cannot face losses because, anyway, the goods purchased are at the ‘purchase rates’ which are sold at MRP to the consumers. The profit margin will increase,” the official said adding that all apprehensions were addressed during a meeting on Monday.
The official also claimed that refunds under the inverted duty structure will not be available during this transition. “Some companies may absorb the cost, others may compensate dealers, while a few could adjust margins,” he said.
Meanwhile, businesses are updating ERP, billing and point-of-sale systems to reflect the new rate.
Past president of the Goa Chamber of Commerce and Industry Manguirish Pai Raiker said they were still awaiting clarity, while admitting that dealers who had already purchased stock might face losses. “When petrol prices fluctuate, the companies bear the cost partially. However, in this case, we will have to wait and see. The gazette notification from the ministry, once issued, will provide the details and clarity,” he said.
