Many consumer products as we all know still have 28% GST (Goods and service tax) due to which their prices are quite high. This rise in price is affecting their sales. There is a huge drop in the demand for such products.
Automobiles, for instance, are placed in the 28% GST bracket. The automobile dealers are shutting shops due to very little sales, not just in the metros but also states such as Maharashtra and Bihar. For most consumer goods companies, March quarter earnings were the worst. Rural growth reduced 1.1 times urban growth. Consumer goods have remained slow-moving, experts said. Many dealers have been facing cash flow issues due to accumulated input credit from the slow movement of inventory. Passenger vehicle sales dropped 17% in April and May. The largest carmaker Maruti Suzuki reported 22% lower sales in May from the year earlier. Jobs are getting impacted.
Govt sees this as something urgent! On June 20th, ahead of the budget presentation, the GST Council is likely to meet up for reducing tax rates of those which belong to 28% tax bracket.
Lowering rates will reduce prices. Demand for consumer goods will increase particularly for small and environment-friendly cars. This will encourage consumers to spend. This will give hope to businessmen and dealer. Indian economy will be restored hopefully.
This is definitely a good news for both dealers and consumers! If you’re a dealer, enjoy sales! If you’re a consumer, enjoy buying goods for a cheaper rate. What do you feel about this tax reduction? Please comment below.