Huge Discounts on Clearance Sale for Apparel, Gadgets in December: GST Impact

December Clearance Sale - GST Impact

Come December, retailers across the country are planning on holding a huge year-end sale to clear stocks before December 31. It is expected that retailers may offer discounts of up to 50 per cent due to the restrictions placed on transitional credit under GST.

As per the GST regulations, retailers who do not have corresponding invoices will not be eligible for claiming transitional credit under GST. The traders are planning on offering stock clearance sales of branded apparel, toys, gadgets, kitchen appliances since they will unable to offset the taxes paid on them against their GST liability.

However, some traders are hopeful that the Government would extend the deadline for claiming transitional credit and plan on holding their stocks (without corresponding invoices) till November.

Two big Indian retail chains are also weighing a move to go to Delhi High Court over the issue as they have been advised by legal counsel that credit restrictions under GST law infringe upon a businessman’s fundamental rights.

Many industry experts are of the opinion that the Government would rule in favour of the retailers keeping in mind the dismal sales of the last quarter. Traders were hoping that Diwali sales would help clear off old stocks however the lukewarm response of shoppers this Diwali has hardly been encouraging.

The GST Council is expected to take a decision on this front in their next scheduled meeting on November 10.