The Retailers Association of India (RAI) welcomes the introduction of a cleaner twoslab GST framework, calling it a vital step towards simpler and fairer taxation. This reform is expected to:
- Lower consumer prices
- Stimulate demand and consumption
- Enhance the ease of doing business, particularly for retailers and MSMEs
- Support overall retail sector growth
Positive Developments
RAI appreciates the removal of the inverted duty structure across the textile value chain, which brings much-needed clarity, balance, and predictability to the industry.
Key Concerns Raised by RAI
Despite the positive changes, RAI has highlighted some concerns regarding specific categories and structural issues:
Structural Flaws in Price-Based GST Slabs
RAI strongly recommends moving to a flat GST rate across product categories rather than relying on price-based thresholds, which:
- Create distortions and promote grey market activity
- Lead to misreporting and compliance challenges
- Harm organised retail, especially for mid- and premium-priced products
- Discourage domestic manufacturing, undermining Make in India
- Create artificial barriers that force consumers to downgrade instead of
expanding natural demand.
Garments and Footwear Above ₹2,500
Placing these in the 18% GST slab could:
- Hurt middle-class affordability
- Weaken the organised retail and garment sector
- Impact categories such as wedding apparel, winter wear, artisan-made, festive, and traditional products.
RAI’s Recommendation:
All garments and footwear should ideally be taxed at 5%, or at the very least, a more reasonable price threshold should be established.
Mobile Phones (Still Taxed at 18%)
RAI maintains that mobile phones are essential goods, not luxuries. Lowering GST from 18% to 5% would:
- Boost affordability
- Support the Digital India mission
- Expand access to digital tools for the broader population
GST on Commercial Rentals
RAI has reiterated its long-standing demand to reduce GST on commercial rentals from 18% to 5% for retail outlets.
Key Concerns:
- Renting is merely the grant of the right to use immovable property, not a service or manufacturing activity
- Such properties are already subject to state levies like stamp duty, registration charges, and property tax
- Levying 18% GST results in blocked working capital.
- It significantly impacts lakhs of small and medium retailers.
RAI’s Recommendation:
Reduce GST on commercial rentals to 5% to support retail viability and eliminate inverted duty structures across key categories.
