The Retailers Association of India (RAI) has welcomed the GST reforms, calling them a vital step towards simpler and fairer taxation. However, the Indian retailers’ body has flagged at least four key concerns regarding specific categories and structural issues that it seeks the government to address.
In a statement, RAI appreciated GST reforms, describing them as supportive of overall retail sector growth as they can lower consumer prices, stimulate consumption, and enhance the ease of doing business, especially for retailers and MSMEs.
It also hailed the removal of the inverted duty structure across the textile value chain, which brings much-needed clarity, balance, and predictability to the industry.
However, despite the positive changes, RAI has highlighted the following four key concerns regarding specific categories and structural issues:
1. Structural flaws in price-based GST slabs
RAI sees structural flaws in price-based GST slabs. As per the association, price-based thresholds will create distortions and promote grey market activity, lead to misreporting and compliance challenges, and harm organised retail, especially for mid- and premium-priced products.
It will also discourage domestic manufacturing, undermining ‘Make in India’, and create artificial barriers that force consumers to downgrade instead of expanding natural demand.
RAI recommends moving to a flat GST rate across product categories.
2. Garments and footwear above ₹2,500
RAI said placing garments and footwear above ₹2,500 in the 18 per cent GST slab will hurt middle-class affordability, weaken the organised retail and garment sector, and impact categories such as wedding apparel, winter wear, artisan-made, festive, and traditional products.
RAI recommends that all garments and footwear should ideally be taxed at 5%, or at the very least, a more reasonable price threshold should be established.
3. Mobile phones are still taxed at 18%
RAI stated that mobile phones are essential goods, not luxuries. Lowering GST from 18% to 5% would boost affordability, support the digital India mission, and expand access to digital tools for the broader population.
4. GST on commercial rentals
RAI reiterated its long-standing demand to reduce GST on commercial rentals from 18% to 5% for retail outlets.
“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,” said the retailers’ associations.
RAI recommends reducing GST on commercial rentals to 5% to support retail viability and eliminate inverted duty structures across key categories.
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