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Sale season? GST regime from July 1, Flipkart, Amazon and others might go on stock clearing spree

Experts believe that these vendors are looking to clear stock lying in warehouses, as they apprehend the new tax regime might result in heavy loss post July 1.

Don’t be surprised if you see a spree of sales on e-commerce sites in the coming weeks. Financial Express is reporting that fears of losses post the Goods and Service Tax (GST) rollout in July is prompting e-commerce sites like Amazon and Flipkart to liquidate their stocks. While it is unclear if it is related, Flipkart has already announced a sale to mark Fathers’ Day.

The Financial Express report suggests the sales will be in segments ranging from apparel, footwear, electronic accessories, mobile accessories, premium watches, women handbag, leather products, health and beauty products.

While Amazon and Flipkart did not respond to mails from Financial Express, small online vendors agreed that they will have to incur a loss if current stock is sold post-July 1. Neeraj Johar, a Jaipur-based online seller of IT products said he would not get any input credit on stocks over a year old and hence it was better to slash prices. A Bangalore-based businessman pointed out that GST sellers can claim a 100 per cent input tax credit against excise that can be availed on high-value items above Rs 25,000 with a serial number and 60 per cent on goods valued less than Rs 25, 000.

Meanwhile, Flipkart’s sale lists iPhone 6 (16GB) with a teaser price somewhere between Rs 20,999 and Rs 29,999. The posts now says Rs 2_, 999. Apple iPhone 6 (16GB) is already priced Rs 24,990 on Flipkart. But it looks like the Apple iPhone 6 will get another price cut.

Archit Gupta, CEO and founder, told Financial Express that despite the availability of input tax credit, it makes sense for sellers to offer discounts and clear their stock due to compliance burden if they carry over the stock into July. To get input tax credit on the excise paid, the seller would have to identify the eligible stock and gather all the relevant documents, which could be extremely cumbersome for many sellers.

Source: indianexpress

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