Most phones sold online end up in grey market
smartphones sold exclusively online are finding their way into the grey market through aggregators who buy all available stock from online channels, causing an artificial shortage, trade bodies have claimed.
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A network of aggregators, or wholesalers, game the system's checks and balances through hundreds of user logins to buy popular online-only models in bulk so that they run out of stock on ecommerce platforms and then sell to retailers across states at marked-up prices, they alleged. retailers can sell these smartphones at inflated rates as they are not available online.
Retailer associations such as All India Mobile Retailer Association (Aimra), which represents about 150,000 handset retailers, have raised the issue with authorities and said these illegal reselling are leading to GST losses to the tune of thousands of crores.
«When using business accounts, the entire 18% GST (that aggregators pay for online purchase) can be claimed back after showing the purchase as a business expense,» Kailash Lakhyani, chairman of Aimra, explained. «And for devices purchased through the regular consumer route after applying all offers and discounts, and sold forward at a higher price, there's a notional tax loss on the differential amount,» he said.
Brands, on their part, are issuing warnings to retailers
