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Shweta T Nanda
Shweta T Nanda

GST

Sales, footfall to remain unaffected post GST roll-out: Luxury sellers

women-luxury Luxury brands provide unique goods, services and experiences and these are the reasons customer visit them more than the pricing

Around this time every year fashion designer Anupamaa Dayal holds an end-of summer season sale at her retail outlets located in some luxury malls and posh bazaars of Delhi. But this year, both the footfall and sales towards the fag-end of the sale has taken her by surprise. 

"In the last few days, the footfall and sales have almost doubled, as compared to the last year, thanks to the anticipation among customers regarding the Goods and Services Tax (GST) implementation and its impact on designer wear," claims the Delhi-based designer, who owns the luxury travel label Anupamaa. 

From next month, i.e. July 1, GST is proposed to replace all indirect taxes like Service Tax and Cess. The introduction of the GST by the government is a significant step in implementing a uniform indirect taxation system in India.

Anupamaa says there will not be much difference in pre-GST and post GST sales figures. “More than half of my business comes from export so there wouldn't be much difference in the business. In case of domestic retail, there will be only a slight difference in pricing post GST implementation. So, I am hopeful sales will not get affected much.” 

But high-end hair salon chain-owner Jawed Habib observes that initially the footfall in malls and retail outlets may dip, but in the long-run the new cess system will benefit the industry. "But we will have to wait and watch," he adds. Depending on the response of customers he will device a new business after a week or so.

So, in what ways will it benefit the industry in the long-run? "There are a plethora of small players in the market operating on their own standards and pricing. The implementation of GST will now require all retailers to organise. It will reduce the price gap between the two sectors. Those who were previously underselling products through cash transactions will no longer be able to do so. Every aspect of the jewellery supply chain will now come under the tax net. This will make all transactions more traceable which will be beneficial for large retailers. GST will have a positive impact on the industry by making it more transparent which will improve consumer trust as well,” explains Mira Gulati, founder and principal designer of customised jewellery brand Mirari.

As far as the footfall post GST implementation is concerned, Mira says luxury brands provide unique goods, services and experiences. More than the pricing, it is this uniqueness that draws customers to the store. "Our focus has been on providing unique one-of-a-kind pieces. Our footfall is governed by the release of our collections. Post GST, we are certain that our customers will continue to throng the store," concludes Mira.

While some sectors are happy with the new tax regime, some aren't. Multiplex owners for instance are disappointed with being clubbed with 'luxury goods' in the 28 per cent tax slab. While the move would flatten rates across the NCR region, in Delhi, it will bring down prices. In other states, it means a spike in prices.

Ajay Bijli, chairman and managing director of multiplex chain PVR, wrote an open letter: "This high tax bracket applies to luxury goods and services. How is cinema a luxury? Last year, 2.7 billion tickets were sold at an average ticket price of less than Rs 80. It's entertainment for the masses." The new tax slabs seem to be sending a clear message to cinemas—if watching movies is not a luxury, reduce the ticket prices and get taxed less."

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Topics : #GST | #luxury

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