The Retailers Association of India (RAI) has welcomed the introduction of the simplified two-slab GST framework, calling it a crucial step towards fairer taxation and ease of doing business. According to RAI, the new structure will help reduce consumer prices, stimulate demand, improve compliance, and accelerate retail sector growth, particularly for MSMEs.
Positive Developments
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Removal of the inverted duty structure across the textile value chain, ensuring greater balance and predictability.
Concerns Highlighted by RAI
1. Price-Based GST Slabs
RAI emphasized that reliance on price thresholds continues to create structural flaws. These lead to distortions, grey market activity, compliance challenges, and discourage domestic manufacturing. RAI recommends a uniform GST rate across product categories to support growth and transparency.
2. Garments & Footwear Above ₹2,500
Placing these in the 18% GST slab risks hurting middle-class affordability and impacting organised retail. Categories like wedding apparel, winter wear, festive wear, artisan-made and traditional products will be particularly affected. RAI recommends taxing all garments and footwear at 5%, or setting a more reasonable threshold.
3. Mobile Phones at 18% GST
RAI reiterated that mobile phones are essential goods, not luxuries. Reducing GST to 5% would boost affordability, support Digital India, and expand access to technology.
4. GST on Commercial Rentals
Currently taxed at 18%, RAI argues that retail rentals should not be treated as services. With additional state levies already applicable, the high GST rate results in blocked working capital and burdens lakhs of small retailers. RAI strongly recommends reducing GST on commercial rentals to 5%.
Conclusion
While appreciating the progressive reforms in GST 2.0, RAI has urged policymakers to address these anomalies for a truly simplified, pro-retail tax framework.
