GST irony plays out in Onam market as consumers postpone purchase plans  

The Onam market of white goods in Kerala, often considered a bellwether of the upcoming festival seasons in the rest of the country by industry majors, witnessed an unexpected irony this year. The announcement of the major revamp in the Goods and Services Tax (GST) structure, which is expected to push consumption with a considerable cut in prices, has had some sort of a negative impact on the Onam market at a time when sales were supposed to peak, according to a section of traders.

Many consumers have postponed their purchase plans anticipating a price fall once the tax revision comes into effect from September 22. Prices of several high-value electronic items, including televisions, air conditioners, refrigerators, dishwashers, and washing machines, are expected to come down under the new two-tier tax structure with rates of 5% and 18%. Items that were earlier taxed at 28% will now fall under the 18% bracket. The decision was announced by Union Finance Minister Nirmala Sitharaman on September 3. Key traders in the Kerala market said they had to deal with a dip in customer footfall, especially for televisions, following the announcement.

8% dip in TV sales

“The sales of TV were going good initially. However, there was a dip following the news of the GST revision. Our preliminary estimate is that there was a fall of around 8% in sales of TV this season, compared to previous year. One reason is understood to be the consumers’ decision to wait for sometime, expecting a fall of up to 10% in prices,” Peter Paul Pittappillil of Pittappillil Agencies said. Mr. Pittappillil said the sales of air-conditioners saw a dip of around 30% while the figures of washing machine remained almost flat. He exuded confidence that the drop in expected sales could be compensated after September 22. “Intermittent rains during the Onam days also took a hit in sales,” he added.

‘Confusion among buyers’

V.A. Afzal, managing director of Bismi Home Appliances, shared a similar picture. He said the GST-related news caused some confusion among a section of buyers though a majority of the consumers opted to purchase.

“We explained to the consumers that the Onam prices, including discounts and special offers, would be a better deal compared to the expected price fall on account of GST reduction. For instance, most companies offer extended warranty during Onam while customers have to pay extra for it during normal days,” he said.

He said 10-15% of customers may have postponed purchasing till new GST rates, going by their post-COVID sales data. He also flagged a dip of around 40% in AC sales compared to previous season.

Sudheesh P. Suresh, branch manager with Nandilath G-Mart, meanwhile, said the GST announcement did not have a negative impact on their sales though they also came across ‘doubting buyers’. “We could convince them about the advantages of Onam prices,” he said.