New GST framework; a critical step towards simpler taxation: RAI
05 September 2025, Mumbai
Welcoming the new two-slab Goods and Services Tax (GST) framework, the Retailers Association of India (RAI) has hailed it as a critical step toward a simpler and fairer tax system.
According to RAI, the new reform will lower consumer prices, stimulate demand, and improve the ease of doing business, particularly for small and medium-sized enterprises (MSMEs).
Specifically, the government's move to remove the inverted duty structure within the textile industry, provides much-needed clarity and predictability, says RAI.
However, RAI raises several key concerns regarding the new framework's impact on specific product categories and structural issues. They strongly recommend moving away from the current price-based GST slabs and instead adopting a flat GST rate across all product categories. The association argues that the current system creates market distortions, encourages gray market activity, and leads to compliance challenges. According to them, this framework unfairly penalizes organized retail, especially for mid- and premium-priced goods, and discourages domestic manufacturing, undermining the ‘Make in India’ initiative. RAI believes, these artificial barriers force consumers to downgrade their purchases instead of expanding natural market demand.
The association voices concern over the decision to place garments and footwear priced above Rs 2,500 in the 18 per cent GST slab. It claims, this hurts the affordability of products like wedding apparel, winter wear, and traditional items for the middle class. RAI recommends a more reasonable price threshold or, ideally, a flat 5 per cent GST rate for all garments and footwear.
RAI has also reiterated its long-standing demand to reduce the GST on commercial rentals for retail outlets from 18 per cent to 5 per cent. They point out, renting property is not a service or manufacturing activity and is already subject to state levies. The high GST rate results in blocked working capital, disproportionately affecting small and medium retailers.
