Ecommerce companies offer discounts ahead of GST roll-out

As the country is gearing up for GST roll-out, ecommerce vendors in India are going hammer and tongs to clear their inventory so that they can reduce losses due to the new tax regime.

This is mainly because the sellers, both on the online and offline platform, can not claim input tax credit for goods already bought that get sold after July 1, the expected date of GST roll-out as per the government sources. Even though Paytm and Amazon have come out openly with pre-GST sales announcements, Flipkart, Snapdeal and Shopclues haven’t opened anything but increased their sales offering.

Paytm has announced pre-GST sales offers for camera and accessories. The ecommerce platform is offering Rs 20,000 cash back offer also along with purchases of Canon EOS 6D and EOS 5D Mark IV camera.

Amazon India is offering pre-GST price offer on utilities, lighting and electronic items. The company's discount offers include smokeless tea light wax candles, 16000 MAH power bank Mobipro, the dual port LED torchlight, lumistick bracelets and freshners.

According to analysts, sellers are compelling ecommerce marketplaces to increase sales this month to get rid of existing inventory. “If sellers are able to comply with the new GST rules they will not be able to claim the tax credit on older stocks. So they are ready to go for selling it at any cost rather than incurring losses,” said the analysts.

As per the GST rules, sellers can avail up to 60% input tax credit on items which attract between 18% and 28% GST. Also, they can claim 100% input tax credit against excise duty for items valued over Rs 25,000.
Google and AT Kearney study state that the total number of online shoppers is estimated to grow 3.5 times to touch 175 million by 2020, from 50 million in 2015. Ecommece will drive 25% of the total organised retail sales of $240 billion in India by 2020 and will reach $60 billion in gross merchandising value.