RAI’s Reaction To GST 2.0 Rate Changes.

Bengaluru, Karnataka, 4th of September, 2025 : The Retailers Association of India (RAI) welcomes the introduction of a cleaner two slab 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.

About RAI:

Retailers Association of India (RAI) serves as the unified voice of Indian retailers, working collaboratively with stakeholders to foster the growth of the modern retail industry. RAI actively engages with all levels of government to support employment. promote retail investments, enhance consumer choice, and strengthen industry competitiveness nationwide.

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