New Delhi – Both the Indian and Global fashion brand manufacturers have decided to seek the help of the department store chains to get the benefits of new Goods and Services Tax (GST) system.
The companies said that they were in search of margin benefits from the store chains as these stores sell multiple brands under the single roof. It is known that the department stores save 2% now that the GST system has been introduced.
The head of the Indian Group said that the fashion brands might have to get tuned in to saving 1 to 1.5% on the cost. Those who would want to go by the real GST system would have to accept that the thing would be like this from now on, said the same official. Everyone is seeking the benefit of this opportunity and trying to tell the fashion brands that the saving has to be passed on.
Fashion brands like Shopper’s Stop and Lifestyle have denied responding to the question about any approach regarding saving pass on. The email with the question is yet to be answered.
Since the year 2010, the retailers are paying around 15% service tax for their commercial space. With the implementation of GST, many of the additional taxes would get levied out.
The service tax and the value added tax have combined to become one levy tax. Now, the rentals account for approximately 10% of the costs of the retailers.
As GST gets introduced, the tax that the retailers paid on rentals could be set aside because now input tax credit is available for GST. A chief executive officer of a well-known fashion brand has said that Shopper Stop saves more than 20 crores each year.
He added for the benefits of the readers that the retailers get a large margin at the time they buy goods from the brands. This margin might get reduced a bit now that GST has been implemented.