The festive season of Diwali is around the corner and people across the country are excited to celebrate this festival of lights. The clothes, sweets and accessories; festive shopping is always a satisfying experience for most Indians.
The latest updates on GST (Goods and Services Tax), as announced by Prime Minister Narendra Modi, are that the current GST structure will be cut down to 5% and 18%. The aim is to reduce the financial burden on Indian consumers and make shopping an easier and enjoyable experience.
While this move is yet to be approved by the GST Council, many Indians are wondering if this GST Revamp might be beneficial for the upcoming Diwali shopping.
‘Will it make clothes and accessories more affordable? Will there be massive discounts by popular brands? These are some of the common queries many have and let’s look into it more in this article. Keep reading!
Impact of GST 2.0 On Festive Shopping
As the ‘next generation GST’, better known as ‘GST 2.0’, is said to make the price of everyday goods more budget-friendly, let’s focus on how it will impact the festive shopping aspect in general:
- Simple Tax Structure: The current four GST slabs (5%, 12%, 18%, and 28%) will be reduced to two GST slabs, that is, 5% and 18%. Most of the fashion apparel priced at ₹1000 fall into the 12% tax slab. With the GST cut, there might be a price drop.
- Industry Growth: Brands and retailers are preparing for a rise in demand. While some are concerned that consumers might delay purchases in the short term to wait for the new rates, the clothing industry is expecting higher sales volumes once the new GST is implemented.
- Increased Spending: By reducing the tax burden on items like clothes and accessories, people will have more money in hand. Hence, there could be a significant increase in spending during the festive season.
- E-commerce Sales: With the GST 2.0, online shopping platforms can expect an increase in sales as consumers can buy higher-priced items at a lower cost. This also means more competitive discounts from online retailers like Myntra and Amazon, giving shoppers even more value.
- Physical Stores: With lower prices, people will have more money to spend, which is expected to increase sales volumes for both large retail chains like Shoppers Stop and smaller, local businesses.
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Clothes & Accessories Become More Affordable
According to some news reports and industry executives, India’s festive e-commerce sales, particularly in electronics, may rise by 15 to 20% due to the GST changes. In the case of clothing and other fashion accessories, items that were previously at ₹1000 or above (the ones in the 12% tax slab), may come with lower prices.
This tax cut will primarily benefit consumers by directly lowering the final price of:
- Clothing: Specific categories such as sarees and other garments that are of ₹1000 or above may undergo a price drop with the new GST revamp.
- Footwear: Shoes and sandals priced at or above ₹1000 might become more affordable as the tax slab shifts to the lower 5%.
As a result of the tax cut, the prices on clothing and accessories are likely to come down by 5 to 7%. Retailers and manufacturers may pass on this price drop to customers as well.
Thus, these products may become more affordable, which can boost sales for brands as well as retailers, leading up to the festive occasion of Diwali.
Top Brands to Watch for GST-Driven Discounts
There is no doubt that the upcoming GST revamp is likely to influence prices of a wide range of clothing brands and customers may find discount offers more than usual.
Here are some of the top brands and categories you can keep an eye on for GST-driven discounts:
- Clothing: Zudio is likely to see a strong boost as its clothing collection becomes more affordable. Westside may also see some of its products fall into the lower tax bracket.
Popular multi-brand retailer, Shoppers Stop, may also offer discounts as per the low GST rate. - Footwear: According to the CEO of Bata India, the upcoming GST revamp can help boost sales of shoes priced under ₹1000, which make up a big part of their business.
India’s biggest footwear manufacturer, Relaxo Footwears, which owns brands such as Flite and Sparx are expecting to see an increase in sales.
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The Future of Festive Shopping: More For Less
With the impact of GST Revamp on fashion and other accessories, here is what you can expect in the near future:
- Big Discounts: Retail prices are expected to drop especially for clothing and accessories. Discount offers may increase and therefore make products more affordable to consumers. Furthermore, several daily essentials may also undergo a price cut.
- Easy Shopping: With Diwali getting closer, festive shopping is likely to increase over the days among Indian families. As prices on clothes and accessories come down, pushing sales upwards for numerous brands. This also means increased accessibility and audience expansion.
- More Purchase At Less Rates: The simplified tax structure means significant price cuts on most everyday goods. Clothing and accessories being one of the major categories, the reduced retail prices can result in increased purchase. That is, consumers can buy more at less prices.
Although the price drop might be a major relief for consumers, festive shopping can still incur a certain level of expense. So, if you are worried about the same and are looking for effective budget planning, a personal loan might be of help.
Buddy Loan being a loan aggregator, connects you to multiple lenders for personal loans with minimal documentation and flexible repayment periods. It also allows you to check your credit score beforehand.
To Conclude
The key impact of the GST 2.0 is that a huge number of products will become easy to access due to the price cut which might make this festive season even more exciting for shoppers. With most clothes and accessories now falling under the 5% tax slab, fashion is about to get more affordable than ever!
For families planning festive wardrobes or stocking up on seasonal essentials, this change means real savings and more freedom to shop without overspending. Retailers are also optimistic that lower prices will boost demand, creating a win-win for both buyers and the industry.
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