Get ready for a pre-GST sale as companies prepare to sell-off existing stock before July 1

Barely a week after the GST Council announced the tax rates for a host of products, it has emerged that the several fast moving consumer goods or FMCG companies are offering major discounts to sell-off their inventories before the new tax rates are effective. The newly-announced GST rates will be launched from July 1.

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According to a report in the Economic Times, FMCG majors like Dabur, HUL, and Wipro are offering huge discounts to retailers. The move has come to avoid a situation where they may have to deal with two different prices for the same products as under the upcoming GST regime some of the FMCG products' prices will come down as their tax rates have been slashed by 4 to 6 per cent.

The GST Council on May 18 decided that commonly used products like hair oil, soaps and toothpaste will be charged with a single national sales tax of 18 per cent. Currently, these items attract 22-24 per cent tax incidence through a combination of central and state government levies.

Sensing short-term disruption in implementing the GST, Dabur chief executive Sunil Duggal told the ET: "We cannot manage and evaluate inventory across millions of outlets in the pre-GST and post-GST scenario. It will be too complex since rates are different across different products."

Dabur is not alone in pushing-out the existing stock, other FMCG companies like HUL and Wipro have also increased wholesalers' margin to clear the existing products. The ET report suggests that the retailers are cautious in increasing their stocks as they fear about the same double-pricing problem that they will have to deal with.

However, market experts believe that there could be a retailer-level schemes that would be passed on to customers as we get closer the GST date.