Bengaluru, India: This Deepavali, shoppers traditionally flocked to buy ethnic wear, including lehengas, kurtas, and salwar suits. However, revised GST slabs have impacted sales of higher-priced garments, leaving many retailers concerned.
GST Impact
Under the new rules, garments priced below Rs 3,000 attract a 5% tax, while those above Rs 3,000 are taxed at 18%. Many garment traders and wholesalers report a decline in sales of higher-priced clothing this festive season.
Sajjan Raj Mehta, a trade activist and shop owner in Chickpet, said:
“Due to the high tax margin on these clothes, our sales have taken a significant hit. Our only sales this season came from ethnic wear, mainly three-piece suits under Rs 3,000.”
He noted that sales of more elaborate ethnic wear have dropped by 20%–30% and suggested the government consider raising the 5% tax slab rather than capping the 18% slab at Rs 3,000 to better support businesses.
Retailer Experiences
Asadh J, owner of Emporio Clothing Store on Commercial Street, echoed these concerns, saying inflation combined with higher GST has reduced purchasing power, limiting sales of higher-priced garments. While items below Rs 3,000 sold well, profits were largely tied to more expensive clothing, which saw reduced demand.
Designer Shloka Sudakar reported a 5% drop in sales, noting that many clients are confused by the new GST slabs and question pricing on bridal pieces. Since her store carries no items below Rs 3,000, the 18% tax on high-value orders has significantly affected her revenue.
In contrast, stores focusing on garments priced under Rs 3,000 have seen a 20% increase in sales, with some selling out and breaking even on investments.
Other Festive Purchases
While puja-related items and Deepavali gifts saw steady demand, shoppers have been cautious about buying larger quantities of gold, silver, crackers, lights, and brass idols, opting instead for smaller purchases this year.