New Delhi: Appliance makers are expecting good sales in the festive season, thanks to the government’s proposal to reduce the GST slab on air conditioners from the current 28 per cent to 18 per cent. This will lead to a reduction in prices by Rs 1,500 to Rs 2,500, depending on the model.
Also, this reduction in prices after the recent income tax cut and repo rate revision by the government will not only help increase the reach of ACs but will also promote premium ACs, where people will buy energy-efficient models due to cost benefits.
Also, this will help reduce the GST slab on TV screens larger than 32 inches to 18 per cent from the current 28 per cent.
Terming it a “great move”, Blue Star Managing Director B Thiagarajan has requested the government to implement these changes as soon as possible as people have put their purchases of room air conditioners on hold.
“Now no one will buy RAC (room AC) in August, one will have to wait till September or October 1. So, what will happen in the meantime? Dealers will not buy and customers will also not buy,” Thyagarajan told PTI.
Asked about the price benefit that customers will get, he said, “It will be around 10 per cent”, as GST is levied on the final pricing.
Panasonic Life Solutions India president Manish Sharma said the industry expects energy-efficient products to attract around 12 per cent GST and the rest will fall in the 18 per cent bracket.
However, “in a situation when GST on ACs and other appliances is reduced from 28 to 18 per cent, prices in the market will directly come down by 6 to 7 per cent, as GST is usually levied on the base price.” So, this is unprecedented,” he said.
He further added that this will reduce the prices of ACs for the end consumer by Rs 1,500 to Rs 2,500, depending on the model.
Similarly, Godrej Appliances said the proposed reduction in tax slabs will go a long way in boosting consumption and increasing demand for appliances.
“AC penetration in India is still at a low level of 9 to 10 per cent. So, reducing GST on ACs from 28 per cent to 18 per cent can help make it more affordable for the common man and improve the standard of living of many Indians,” said Kamal Nandi, business head and EVP (appliances business), Godrej Enterprises Group.
According to Nandi, room ACs are currently taxed at 28 per cent, and other appliances such as refrigerators, washing machines, microwaves are already taxed at 18 per cent.
Avneet Singh Marwah, CEO of Super Plastronics Pvt Ltd (SPPL), a TV manufacturing company with licenses for several global brands, said this will lead to increased consumerism in the domestic market and a boost in sales during the festive season.
“The brand expects to see a 20 per cent year-on-year growth,” he said. This is a great comeback for ACs and smart TVs larger than 32 inches, both of which were earlier taxed at 28 per cent.
However, he also suggested that the government should seriously consider bringing down the tax on 32-inch smart TVs to below 5 per cent, which would be a big change as 38 per cent of the segment comes from the unorganised sector.
Unseasonal rains and premature arrival of monsoon have impacted segment revenues of listed companies involved in the room-air-conditioning (RAC) business by 34 per cent in the June quarter.
Listed companies such as Voltas, Blue Star and Havells have reported a 13 per cent to 34 per cent decline in their segment revenues in the housing RAC business in the latest June quarter, putting short-term pressure on their revenues and margins too.
