Kitchen appliance makers take steps to pass on GST cuts to consumers

From talking to businesses to printing new price lists, companies take steps to pass on GST cuts to consumers

Washing machine, refrigerator and kitchen appliance makers have begun the process of passing on the goods & services tax (GST) cut (of 10 percentage points) to consumers. On July 21, the GST Council brought the above-mentioned categories into the 18 per cent tax bracket from 28 per cent earlier, and gave companies time till the end of the month to initiate price changes on products.

Firms from Godrej Appliances to Haier, Samsung, Intex and Prestige Appliances are all talking to dealers, printing new price lists, fixing new labels on stocks lying with them and supplying new labels to dealers, in a bid to communicate the price change following the GST cut.

The development acquires significance in the wake of notices issued by the Directorate General of Safeguards in recent months to companies who failed to pass on GST benefits received in previous rounds.

Given that the last big round of rate cuts was initiated nine months ago (in November 2017), firms that benefitted in the current round had a precedent in front of them, said Nihal Kothari, executive director, Khaitan & Co. “The last round saw mostly fast-moving consumer goods companies affected by rate cuts. This time, small and big appliance makers have gained as well. However, the learnings would be common because the steps to pass on the GST benefits are more or less the same.”

Companies such as Prestige Appliances, for instance, issued advertisements in newspapers on Monday, asking consumers to “demand the new pricelist showing the revised MRPs” from stores while purchasing products. It also gave an indicative list of products with reduced prices.

Most firms are prominently displaying the revised price list on their websites, even using the social media to communicate the message. “Consumers today are on social media and tools such as these come in handy while promoting an important message on price change,” according to Kamal Nandi, business head and executive vice-president, Godrej Appliances. "Apart from social media, we will give out ads in newspapers to announce the new prices, especially with the festival season drawing near.”

Rajeev Bhutani, senior vice-president, consumer electronics, Samsung India, said it was extending the full benefit of the GST cut, adding, it would fuel consumer demand in the festival season. This point was also endorsed by Nidhi Markandey, director, Intex Technologies. “We are ready to pass on the GST benefits and will inform all trade partners shortly.”

Eric Braganza, president, Haier Appliances, said, conversations with businesses would continue for some time, since ensuring that smaller dealers and distributors did the needful (of passing on GST benefits) was important. “While fixing labels on products can have its limitations, constant engagement with trade will help in times like these.”

Doing the needful
 

• Washing machine, refrigerator and kitchen appliance makers are passing on GST benefits announced on July 21 
• Most have time till the end of the month to do so 
• GST on these categories has come down to 18 per cent from 28 per cent 
• The move acquires significance since the Directorate General of Safeguards has issued notices to errant companies in the past