With the country's much-awaited the Goods and Services Tax (GST) reform in action, e-commerce players are optimistic that more tax benefits will come in within the new tax regime, which will be shared with the consumers.
"Earlier, we were not able to take tax credit for many things. Now when we are able to take these, there is definitely some saving from the cost side also. If we have more margin, then we should pass it on to the consumer and we are definitely doing that," Vishwas Shringi, founder of Voylla Fashions, said.
The fashion jewellery e-commerce platform, which also has over 100 physical stores in the country, has started offering an additional "GST bonanza discount" for the customers starting July 1. Shringi added that it is not a stock clearance sale, but providing customers an idea of the benefits under the new system.
Suchi Mukherjee, Chief Executive and co-founder of LimeRoad, online platform for fashion and lifestyle, said: "Since sellers will now be able to take tax input and the overall cost of manufacturing will go down. The product pricing will be more competitive and will increase their sales. This cost benefit will eventually be passed on either partially or completely to the customer in the form of lower costs."
The new tax regime may bring about some disadvantages in the near term, which, however, will be short-lived, according to Harsh Shah, co-founder of Fynd, a fashion e-commerce portal.
"With e-commerce, one good thing that the GST will bring is that everything in the sector will get into the organised economy. E-commerce as a distribution channel will beome stronger. However on the flip side, the amount of compliances that we will have to do in order to align with our sellers is going to be very high," Shah said.
"For the short term, we might have to face these compliance issues and risks, but over time its will benefit because it will even out everything between organised and unorganised sector," he said.
Shringi added that prices under GST will not surge, but reduce because of the "anti-profiteering law", which requires that if there is an excess of profit at the manufacturer or the seller's base, it is mandatory to be passed on to the consumer.
"In a way, GST will actually work towards consumer's benefit. It will help every brand or manufacturer yp make the process more seamless which will definitely affect in reducing the cost. Once the cost reduction happens, then the price reduction will have to happen," he said.
