Companies reduce supplies ahead of transition to GST

A leading consumer appliances maker will stop taking fresh orders from its dealers starting Thursday. This will ensure that the company clears all pending orders in the next two-three days and spends the following four-five days to update its system for transition to the goods and services tax (GST) from July 1. Between June 25 and 30, the company's dispatches will either stop or slow down to a minimum. 

Companies across several sectors have decided to stop dispatches or keep them to a minimum during the last days of June to ensure they are ready for the switchover to GST and their dealers and distributors are not saddled with excess stocks. For products dispatched before July 1 but sold after that date, dealers will have to bear an additional tax burden. Transition rules allow dealers to get credit for only 40-60% of excise duty paid on goods that remain unsold in their showrooms on June 30. 

"This time we have been told that the quarter will end a few days early," said an executive at Godrej Appliances who did not wish to be identified. However, there are unlikely to be shortages in the market as most dealers are maintaining adequate stocks. 

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