The Goods and Services Tax (GST) was implemented on July 1, 2017. The new tax will result in an increase in the prices of consumer durable products, such as air conditioners, televisions, washing machines, and refrigerators.
Impact of GST
Industry experts estimate that the prices of consumer durables may increase by 2% to 3% or more under the GST regime. Trade partners may feel some impact due to the input tax credit (ITC).
Under the new tax structure, GST on consumer electronics and home appliances will be at a rate of 28%. The tax before GST was different for various products. For consumer durable products like refrigerators, washing machines, air conditioners, and televisions, the rate was between 23% and 28% and varied from one state to another.
Some experts are of the opinion that the effective price increases may be lower than estimated and prices may increase by 2% or 3% only. However, the prices of such products are expected to reduce in Mumbai as this city attracted an additional octroi duty of 5% before the implementation of GST.
With a higher GST rate, prices of consumer durables are expected to rise by 3% to 4%. However, the costs of major inputs, such as copper, steel, and plastic have been increasing since the last few months. The prices of compressors used in air conditioners and refrigerators have also increased by 4%. The decreasing demand had forced manufacturing companies to delay price hikes. However, with increasing cost of materials and higher GST rate, companies may not be able to absorb the additional expenses. As a result, manufacturers may have to hike prices twice during the year.
If you had delayed your purchase of an air conditioner or refrigerator, you do not need to be disappointed due to a price increase. You may easily buy an AC on installment using a consumer durable loan. Such loans are provided by several banks and non-banking financial companies (NBFCs) in the country.
Here are three benefits of such loans.
- Simple documentation
Unlike auto or home loans, these loans are available with minimal documentation requirements. You need to submit thebasicdetails such as name and birth date, office and residential address, bank account details, and identity proof to apply for a loan. The simple and easy documentation ensures the entire procedure is completed quickly ensuring you are able to take home the product without any delay.
- Cost efficient
Consumer durable loans are available at an affordable rate of interest. In addition, you may choose loan tenure of up to two years. The equated monthly installment (EMI) schedule is flexible and determined based on your financial situation. This ensures you do not have any difficulties while servicing your purchase of a refrigerator on EMI or other electronic goods.
- High amount of loan
Lenders like Capital First provide a loan amount of up to INR 5 lakh. Therefore, you are able to purchase your desired AC or refrigerator without compromising on your needs.
Although the prices of consumer durables are expected to increase after the implementation of GST, smart financing options are easily available. You may buy an AC on EMI or a refrigerator on installment without facing any problems. Availing of a loan will enable you to bring home a new appliance this festive season.