Traders: 28% GST rate may lead to 2-3% rise in white goods’ price

Traders: 28% GST rate may lead to 2-3% rise in white goods’ price

FPJ BureauUpdated: Thursday, May 30, 2019, 05:37 AM IST
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 New Delhi : The government’s decision to levy 28% tax on air conditioners, refrigerators and other white goods under the new goods and services tax regime has set the stage for a possible price hike of 2-3%, traders at leading electronic retailers such as Croma Electronics, Vijay Sales and Kohinoor Electronics said.

“We are expecting 2-3% rise in costs and that will depend on which brands would pass on the costs and which will absorb it. There is not much clarity; everything is in a state of flux,” Vijay Sales’ Managing Director Nilesh  Gupta told Cogencis.

However, overall price hikes would depend on any one manufacturer taking the lead. Industry experts and analysts believe that prices will have to be raised in order to make up for the rise in tax rates. The consumer goods industry currently faces total tax rate of around 25-26%, which includes central excise duty of 12.5% and state value added tax of 12.5-14.5% on air conditioners, washing machines and refrigerators.

“We will have to take a view on what changes will take place in input costs. We will wait to understand if the competitors are raising prices before taking call on this,” Blue Star Ltd Joint Managing Director B. Thiagarajan told Cogencis.Thiagarajan added that the pricing of these goods would depend on the competition.

Dealers would have to bring prices down if that is the consensus, he said.

Any clarity on pricing will emerge only once manufacturers and traders start implementing GST and realise the ground realities, traders as well as the manufacturers said. Some manufacturers including Blue Star and Videocon group expect prices to fall. Prices may come down by 1.0-1.5% in three-four months of GST rollout once supply chain efficiencies improve, said Thiagarajan.

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