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Beware! Did You Know The Truth Behind The Diwali Dhamaka Offers? A True Consumer Story.

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Truth Behind The Diwali Dhamaka Offers--True Consumer Story

Truth Behind The Diwali Dhamaka Offers--True Consumer Story

Important: We are running this story as an illustration of the real ‘dhamaka‘ that lies behind the Diwali Dhamaka discounts and offers. Our only word of caution to every consumer waiting to avail the discount season–by all means go ahead…but do remember, its Diwali for the Brands too!

Tadka Take

Diwali Dhamaka!!!

Festive Season Discounts!

A look around and suddenly Diwali is a festival of discounts rather than lights.

Scores of middle class Indians eagerly await Diwali–not because they love the festival but because they want to adorn their house with Lakshmi’s latest luxury consorts–the LED TV that is up for grabs or that extra large refrigerator  designed to store humans.

But irrespective of the fact that the old television resembles a black and white antic, magically transforming every human form on screen into alien apparitions; irrespective of the fact that the attic storage is more functional than the old refrigerator and the table top is cooler than its freeze zone; the ‘mango’ junta waits and waits with patience that can put hermits in Himalayas to shame–for the festive season to arrive; the season when every coveted lifestyle adornment is suddenly so acquirable.

Every single Brand; every single showroom in the country is suddenly brimming with unfathomable generosity and for once consumer does feel like a king!

There is of course nothing wrong with this. The consumers get the best prices, excellent deals and Brands get business, loads of business. Its a symbiotic arrangement which works fine until the Brands are reasonably fair. See, we are very reasonable people. We don’t even demand absolute fair-play. We are happy so long as the game is ‘reasonable’. But even that seems humongous demand.

And so the consumers get lost in a maze of confusing terms, flashy ads and convenient fine prints. The end result is a consumer who feels that Diwali exploded right into his face and a Brand that laughs its way to the Bank.

Sridhar wrote to us with his story that is one of the typical cases of the consumer harassment that so frequently happens during the discount season. Below is his story in his own words.

Consumer Story

Like every typical middle class Indian consumers, I was also waiting for a festival season to buy home electronics to avail discounts and also lot of gifts. Was really happy to see Diwali celebration nearing and many shops have started Diwali offers for their consumers. On Nov 4th I went to SHAHS electronic stores at Chrompet area (@Chennai). Was very excited to see the LCD/LED/Plasma tv kept for display. Was very confused which TV to buy as all were so good at their point and unique features. But I finally settled with LG LED 42′ LS3400 series worth 50,000/-. The price was so high but still I could not resist myself from buying the TV (which definitely exceeded my budgets) through my HDFC credit card. As I was about to shift to new house on Dec1(and also did not want to loose this festive season purchase)), so I booked the TV and paid 50% of the price of 25000/- and agreed to pay the pending 25000/- this month end and get the product delivered.

On Nov 11th in TOI newspaper I see the SHAHS ad saying they give gifts worth 7990/- for consumers buying products worth Rs 50000/- or more(Have attached that ad in this mail). I was so happy to see this ad as I would be getting the gifts. My celebration time started. When I contact the SHAHS store where I bought the TV they said, the offer is applicable only for those consumers who bought more than one product worth Rs 50000/ or more and not for consumer who buy a single product worth Rs 50000 or more. I was shocked to hear this from the shop manager. I asked in return, why you are ignoring my gifts when you get the money 50000/- at the end of the day. WHy you focusiing on the no of products. You should concentrate on the Money and not the no of products consumer buy.

Just for cross checking I contacted OMR branch of SHAHS store and verified this gifts offer, they confirmed that this is applicable to even single LED TV also. And when I updated this news to the chrompet manager, he updates this to OMR store. Now the OMR store also ignoring their previous statements and saying the same stupid logic.

When I asked them why they did not mention this extra condition in the newspaper ad, they replied this ad will bring lot of customers to us. I was mentally affected by this statement from a responsible person.
I was totally shocked and was irritated that I bought a product from a fraud stores. I was completely upset to see they fooled me and also many more customers will be also fooled.

Tadka Take 2

Sridhar’s experience is by no means an isolated one. Nor is the tact to fool consumers by misguiding or confusing them a novelty. The trouble precipitates when the offers start getting dubious, advertising dodgy and fine print finer. This is the proverbial catch. If you are lucky, you will get past the festive season unscathed or with minor injuries. But if not, then your Diwali will be indeed ‘memorable’ but definitely not in a way you wish!

Picture Credit: auto.indiamart.com

Sale! Sale! Sale! Decoding The Tax Maze Behind That Discount On Your Shirt.

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Twitter Query On Sale And Taxes

Twitter Query On Sale And Taxes

Twitter Query Extra Taxes On Sale Price Allowed

Twitter Query Extra Taxes On Sale Price Allowed

Sale! That is one word that always catches our eye. More so if you belong to that proud section of the population called ‘girls’. There goes our allegiance to the cliche–yes of course, that cliche which demands that we always make a reference to squealing girls whenever the word ‘sale’ is uttered.

Much as the feminist in me pleads to open a debate on how wrong that cliche is, I will steer clear of the issue and concentrate on the query at hand. (Which by the way is an extremely logical question that comes from a girl-who evidently thinks  not squeals when she sees a ‘sale’ sign. See-there I made my point!)

So one of our readers, asked us that when they say sale and then taxes extra, is it allowed?

The question, honestly, made us do a double take. The number of times we had gone to a sale and still never noticed this!

A primary research indicated that there are no clear answers to the question. So with a little help from our legal expert, Himani Subramanian, we got down to decoding this tax maze.

Under the Consumer Goods (Mandatory Printing of Cost of Production and Maximum Retail Price) Act, 2006, the consumer cannot be charged over the maximum price printed on the goods by the manufacturer. These guidelines are as follows:

1. Consumer goods mean all goods and items brought in the market for sale and are meant for the use and consumption of the consumers;

2. Cost of production means cost incurred directly or indirectly by the manufacturer in the production of goods;

3.Printing means printing of the cost of production and retail price at a visible place on the product in Hindi and English and the local language of the place it is sold; and

4. Maximum retail price means such price at which the product shall be sold in retail and such price shall include all taxes levied on the product.

The VAT is calculated over and above the Sell Price.

So the calculation is:

Sell Price + VAT = MRP
Rs. 95/- Rs. 5/- Rs. 100/-

VAT is governed by the State VAT legislation (VAT Acts of the particular State). The percentage of VAT varies from State to State within India.

In other words, MRP includes all taxes including VAT and no retailer can charge a consumer over and above MRP. Below MRP, however, is permissible and fairly common.

We will look at two scenarios

  1. Where flat percentage of discount is offered on the MRP.
  2. Where the cost of goods is reduced to particular amount, that is, the sell price is discounted.

In the first scenario the taxes including the VAT forms part of the MRP and discount is offered on the total MRP. The consumers must note that the ‘Sale’ here should specify that the discount is on MRP. If this is the case, then no extra taxes can be charged and if the retailer does so, he will be liable under the Consumer Protection Act.

For example: If 40% discount on MRP of Rs. 100/- is offered, then the total cost of the item will be Rs. 60/-. No extra taxes can be charged.

 We would also like to add that this is not a normal practice and rarely (never!?) do brands offer a discount/sale on MRP.

 The second more likely and common scenario is when the discount or sale is offered on the cost of goods which does not include the taxes and consequently, taxes are added on the discounted price.

A possibility here is that of the dealer misrepresenting the MRP as sell price in the advertisement and then charging taxes over and above the price.

For example: There is a sale going at Arrow where the cost of shirts/T Shirts is reduced from Rs. 799/- to Rs. 499/- and additional VAT is charged on Rs. 499/-. The dealer can argue that Rs. 499/- is the sell price and hence VAT is applicable.

If the dealer has misrepresented the discount by making false advertisement, he can be held liable under the Consumer Protection Act, 1986 in addition to relief under the Central Excise Act or the State VAT legislation.

The practice of sale or discount is an industry/market practice and does not really have a legal background and/or regulations.

The only precaution that we can suggest for the consumers here is to ask the right questions and carefully understand the terms of the discount being offered. The consumer has to be sure that the price list does not mention the condition ‘separate taxes applicable’ and if it does, (which is usually the case), take care that the price being discounted is the sell price not the MRP.