Shelves at leading offline retail chains running empty - GST impact

Leading offline retail chains are unable to stock shelves with consumer durables like refrigerators, washing machines and television sets as they say brands are yet to supply fresh stocks, four days since the rollout of Goods and Services Tax (GST).

"At this point in time, the biggest challenge is the absence of stocks because brands are not ready to give us fresh stocks. The next few days are about finding stocks. Our shelves are running empty," said Croma chief marketing officer Ritesh Ghosal.

An official at a Vijay Sales store also said new stocks of home appliances and electronics, based on GST, haven't been supplied yet. "Our team cannot comment on GST implications as they are still working out invoice-based issues," said the official.

Brands may either be getting their systems ready to process GST invoices or may be in discussions with their chain of suppliers and distributors to figure out an arrangement, Croma said.


"Just like retailers, distributors also face a question of what to do with their old stock. The distributors may not be willing to pass on the brand's new prices and new stocks without getting an answer on the old stock," said Croma's Ghosal.

As the GST kicked in at midnight on June 30, it subsumed excise duty and all other taxes that are embedded in the price of goods. If retailers have inventory on June 30, they'll have to levy GST to sell them after July 1. If the GST rate is higher than the earlier total tax incidence on the item, the seller will make a marginal loss, even after the 60 per cent input tax credit he or she can claim on taxes already paid. Either way, Ghosal said, most brands have not started supply of fresh stock. "All the goods we have are what we had as of June 30, which is being sold at the pre-GST rates."


Laptops are one of the main categories in short supply, he added.

Sony India said they were still studying the implications of GST. "We have no intentions to revise price of TVs as of now," said Sony India head of sales Satish Padmanabhan.

Dell, Samsung and Lenovo did not respond to queries.

"All companies will be moving their IT systems to align with that of GST Network so that they can apply GST on the goods they clear now. Many companies do a blackout for 3-4 days to migrate for this process. This 'cutover' is a temporary thing," said Abhishek Jain, indirect tax partner, EY.

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Item Reviewed: Shelves at leading offline retail chains running empty - GST impact Rating: 5 Reviewed By: PRASHANT ENTERPRISES