Purchase deferment on anticipated GST rate cuts impacts festive sales in India
25 August 2025, Mumbai
Deferring of purchases by consumers in anticipation of a potential Goods and Services Tax (GST) rate cut has negatively impacted festive retail sales in India. Both offline and online retailers are seeing a muted start to the festive season, which typically begins with festivals like Ganesh Chaturthi and Onam.
The news of a possible GST rate cut has led to a wait-and-watch approach from buyers, who are holding off on major purchases for high-value items. This consumer behavior is causing a dilemma for companies and dealers. Many have stocked up on inventory in preparation for the festive rush, and a delay in sales could lead to financial penalties from banks on their inventory financing if the stock isn't sold within 60 days. Retailers are fielding numerous inquiries from customers about when prices will drop, and some have even reported booking cancellations.
The proposed GST rationalization is part of the government's plan to simplify the tax structure and boost consumption. The GST Council is expected to meet to finalize the new rates and their implementation date.
While the tax cuts are a welcome move that will ultimately benefit consumers and stimulate demand, the timing is proving to be a challenge. The retail sector is working with government officials and has been assured of help to manage the situation. E-commerce platforms are also preparing for a potential late rise in sales around Diwali, by which time the new rates are expected to be in effect.
