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GST midnight sales disappoint consumers looking for steep discounts

LiveMint logoLiveMint 01-07-2017 Kavya Kothiyal

Mumbai/Bengaluru: At midnight on 30 June, the Indian economy switched over to the Goods and Service Tax (GST) subsuming over a dozen taxes from the Value Added Tax (VAT) Regime into one tax across the nation. The much awaited tax saw retailers like Big Bazaar going on sale at 12am to bring in the new tax regime. The sale attracted consumers who came out in large numbers — some out of curiosity to witness what the company termed as GST ‘muharat’ (auspicious) shopping; and some to avail the discounts as they feared prices would increase following the implementation of the new tax regime.

However consumers looking for steep discounts the type the retailer is known for with events like Sabse Saste din ( cheapest shopping days) for the Independence Day weekend were disappointed.

“The word sale itself is exciting and to come out at this time of the night adds to it,”said Geethmala Prashanth, a homemaker in Bengalaru. However Prashanth was clearly bargain hunting and felt that the discounts were not the best.

“They’ve made sure they don’t have much loss. You may, at most, get Rs10 difference (compared with non-sale) on some items because Big Bazaar is anyway known for low prices. Better products at a lower price would have been worth it but the same products at just Rs10 or so off is not too satisfactory,” says Prashanth who wanted to buy a microwave, a dustpan, a bedsheet and teacups but finally bought a Bombay Dyeing bed sheet sold at a 60% discount on an MRP of Rs1,199.

“So far I’m not too satisfied. I was looking only at clothing. The products are good but the discounts aren’t too much,” said Naseer Ahmed, a travel agent.

To be sure, the retailer was largely offering a 2-22% discount on food and groceries items and these discounts were reflective of the new cheaper pricing under GST. “Sales keeps on happening but this is a price reduction which is permanent,” said Kishore Biyani, chairman and chief executive officer, Future Group, parent company of listed companies like Future Retail Ltd which operates Big Bazaar. At a star Bazaar store in Andheri West which stayed open till midnight and offered up to 50% discounts.

However the sale lived upto its promise for those who did just groceries shopping.

“It was a pleasant surprise for me. My family has come to stay with me and as of now my grocery expenses have gone up. If this (grocery) comes at a 30% discount then there’s nothing like it and on average it has worked out 30% cheaper so far,” said Akanksha Singh, a credit analyst working for a bank.

“I bought daily consumption items and got some discount which is a relief,” says Raghunath Bhattacharya, 60, a regular Big Bazaar customer who visited the mega store in Mahim to witness the midnight shopping experience.

Meanwhile, across retail stores and even online consumers have been stocking up. The general perception of GST has somewhat made customers fearful. They are expecting a boom in costs while for some it’s a transitional period in the tax structure.

At a Star Bazaar store, in Andheri West, Mumbai which stayed open till mid night, one consumer filled four shopping carts with groceries like biscuits, rice, tea powder, noodles, soaps and detergents as she felt the prices would go up post GST.

“The prices will shoot up from tomorrow onwards and for a middle-class customer we would definitely look for such sales. Normally I won’t come for shopping at midnight but if something cheap is available on your plate for a limited number of time, I would try not to lose a chance,” said a 45 year old lady who expects no relief to customers from GST.

Under GST, the daily consumption items like milk, fruit and vegetables, foodgrain, pulses and cereals have been exempted from tax. Sugar, tea, coffee, edible oil and newsprint have been placed in the lowest slab of 5% while ready-made garments will be taxed at 18%.

A sale though is a sale and most consumers were out just to avail of the better prices. “I had made up my mind to come for shopping at Big Bazaar as soon as I came to know about the mega-sale late in the evening,” says Poornima Shah, 20, who is confused about the actual impact of GST on day to day routine. Shah however is of the opinion that prices for branded apparel will go up. A simple top of Rs499 which I generally used to buy will now cost around Rs600 after the tax. “We will be paying more for everything now. Today I am going to grab as much as I could,” she says.

Consumers fears of rising prices have driven up sales across retail stores in the past month. Moreover, retailers have also been on sale, offering steeper discounts as they looked at making most of the old tax regime.

“I am surprised that the business has gone unprecedently high. I thought that the business would go down but the business from our expectation is 30% up,” said Biyani talking about the month of June.

The new bill

The most visible change is the bill which now reflects the GST slab rate for the state, centre and intra-state transactions. The invoice also carries a summary of the number of items under each tax slab that are being sold. It has to also reflect the harmonized system nomenclature (HSN) or the master item code which is a universal code.

This is unlike the Value Added Tax (VAT) regime where bills just reflected the MRP (Maximum Retail Price) of the items and discounts with a summary of the applicable taxes at the end.

For instance, when shopping for groceries at Big Bazaar, the new bill for purchase of shampoo, toothpaste, rice and teas ill now give a breakup of the price and the state GST and central GST applicable for each item separately.

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