New Delhi: Get ready to pay more for consumer durables and appliances.
The proposed good and services tax (GST) will inflate prices of consumer durables like television, air conditioner, refrigerator and washing machine which will go up by 4% or more, according to industry estimates. Smaller home appliances such as electric irons, mixer grinders and juicers will also become dearer as all of them will come under one GST slab.
Under the proposed GST slab, all home appliances and consumer durables will attract a 28% tax, which was different for different products earlier. For durables like television, air conditioner, refrigerator and washing machine the cumulative tax (excise and value-added tax) was around 23-28% depending on the state. However, prices in cities like Mumbai will come down as there was an additional octroi of 5% on consumer goods, said an executive at one of the top durables manufacturers.
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“Under the new GST tax slab, a price rise of 4% and upwards can be expected for consumer durables. We believe this price shall get neutralised in couple of months. The trade partners though might have a slight impact due to input tax but they can recover by increasing their selling price," said Manish Sharma, president and chief executive, Panasonic India and South Asia.
Kamal Nandi, business head and executive vice-president, Godrej Appliances, a division of Godrej and Boyce Mfg. Co. Ltd, however, said effective price increase would be lower. “For all appliances, the tax incidence is somewhere between 25-26%. It varies from state-to-state. Following the 28% GST tax rate, prices will go up by 2-3%, depending on the state," added Nandi.
Smaller appliances makers are unhappy. “Small domestic appliances such as electric irons, mixer grinders, juicers and air coolers should not have been equated with white goods like refrigerators and air conditioners. The government should use this opportunity to rationalise rates rather than simply going ahead with mechanical grouping. Proposed 28% GST on small domestic appliances is one of the highest in the world and certainly the highest among countries of our size," said Sunil Wadhwa, CEO, Groupe SEB India that sells Maharaja Whiteline branded appliances among others.
Wadhwa, however, added there may not be significant increase in prices as a large percentage of equipments used in making appliances are manufactured in excise-free zones. “At present, we have no clarity on how the present excise exemption will work, post GST. In addition, there are going to be multiple costs associated with old stocks, compliances and increased cash flow requirements," said Wadhwa.
New players like Intex technologies, however, are waiting for clarity on tax exemptions. “Clarity is awaited on GST on services and treatment of area based exemptions. Clarity is also required on differential duty on imports and local manufacturing to see the full impact of GST," said Rajeev Jain, director and group CFO, Intex Technologies.
Companies like Samsung India Electronics Pvt. Ltd, LG Electronics India, Whirlpool of India, and Micromax declined to comment on the issue.
Harveen Ahluwalia contributed to this story.