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The move is to ensure that the companies clear all the pending orders and adopt new systems quickly

By Deepti Jain

With less than two weeks to go before the implementation of the Goods and Services Tax (GST), several manufacturers across various sectors have decided to stop taking fresh orders from dealers.

This move is intended to ensure that the companies clear their stock in the next two-three days and devote the remaining four-five days to update the system for transition in accordance with the new tax regime from July 1.

Another reason for minimizing the supply of the products is that the dealers will have to pay an additional tax  if the product is dispatched before July 1 but is sold after that date. Transition rules allow dealers to get credit for only 40-60 percent of excise duty paid on goods that remain unsold in their showrooms on June 30.

“Though there is no major change in production due to GST transition, we do foresee a slowdown in production in some category of products,” said Dabur CFO Lalit Malik.

Several online retailers like Flipkart, Amazon  and Paytm  have already started  giving discounts to the consumers on apparel, footwear, electronic accessories, mobile accessories, premium watches, handbags, leather products, and health and beauty products in order to clear their catalogue before the implementation of the GST.

“The Paytm sale will host over 6,000 retailers across 500+ brands, with all major brand labels participating in the retail extravaganza,”said a Paytm official.

“We will offer deep discounts and attractive cashback offers on consumer durables including TVs, laptops, phones, ACs and refrigerators,” he added.

Meanwhile, the experts believe that India may witness an inflationary impact during the transition phase, which will fade away gradually with proper law enactment and implementation of measures like anti-profiteering.

Here is a look, at the expected immediate impact of GST on the common man’s pocket:

These services are likely to become more expensive

  • Mobile bills
  • Renewal premium for life insurance policies
  • Banking and investment management services
  • Basic luxuries for a common man like WIFI and DTH services, online booking

Services that may get cheaper in most states

  • With entertainment taxes getting subsumed in GST, prices of movie tickets and theatrical performances may become cheaper in most states.
  • Dining in restaurants may also become more pocket friendly in most states.

Prices of these essential services are likely to rise

  • Residential rent
  • Health care
  • School fees
  • Courier services
  • Commuting by metro or rail
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