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GST: Consumer durable firms unlikely to pass on tax burden to buyers

Current tax rate is around 25-27%, which would go to 28%

Consumer durables, GST, GST impact, India, Home appliances
Press Trust of India Mumbai
Last Updated : Jul 02 2017 | 3:17 PM IST
The consumer durables industry is expecting only a marginal price revision despite the category being placed under the highest tax slab of 28 per cent under GST, as players look forward to the festive season in the coming months.

The festive season accounts up to 35 per cent of the consumer durables sales.

"In the short-to mid-term, I see the fundamentals remaining the same. Though consumer durables industry is being taxed at 28 per cent, which is slightly more than what the previous tax structure, I don't anticipate any major price increases in the coming months," BSH Household Appliances MD Gunjan Srivastava told PTI.

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The tax rate for the sector was around 25-27 per cent, which has been hiked to 28 per cent under GST.

"I expect the prices to remain constant at least in the initial period before people understand what how much is the additional cost. But, that would take some time for people to accurately measure. We are also approaching the festival season, so the industry will like to moderate it," he added.

Godrej Appliances business head Kamal Nandi expects prices to go up by 1-2 per cent which could impact demand in the short-run, but expects it to pick up during the festive season.

"Home appliances have become a necessity now with evolving consumer lifestyle and a lower tax slab would have made appliances more affordable in a low-penetrated market.

"With 28 per cent tax under the GST, we expect the consumer price of home appliances to marginally go up by 1-2 per cent. This could have an impact on demand in the short- run," he said.

"Normal monsoons and the resultant boost to the agricultural economy and hike in allowances to government employees will propel demand during the forthcoming festive season," he added.

Panasonic India Chief Financial Officer Manish Gupta said they expect a revision in prices of select category.

"We are expecting the primary sales to retailers from companies to pick up from the second week of July," he said.

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First Published: Jul 02 2017 | 3:17 PM IST

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