RAI raises concerns over proposed GST hike, calls for balanced approach
05 December 2024, Mumbai
The Retailers Association of India (RAI) has voiced its concerns over proposed GST rate increases, warning of potential adverse effects on the formal retail sector and consumer sentiment.
RAI highlights that the GST framework has been instrumental in formalising businesses and fostering a structured retail ecosystem. However, steep tax hikes could reduce the competitiveness of formal businesses, driving smaller players toward unorganised markets. CEO Kumar Rajagopalan cautioned that such a shift could ‘undo the progress made in formalising businesses under the GST regime.’
The association also underscored the potential impact on the Make in India initiative. Despite India’s position as a global economic leader, many premium product purchases by Indians occur overseas. Higher GST rates could further hinder the domestic growth of this segment, delaying progress in achieving the government’s goals.
RAI expressed particular concern for consumers, especially women managing household finances, who may face affordability challenges due to increased costs. The association fears that such hikes could dampen discretionary spending, which is crucial for India’s celebratory and festive markets, further slowing down consumption and growth.
Rather than raising tax rates, RAI advocates for lowering rates and enhancing compliance mechanisms to expand the tax base without burdening consumers or affecting sales. Rajagopalan emphasized that “boosting collections should focus on improving compliance, not increasing taxes.”
RAI urged the GST Council to adopt a balanced approach that considers the broader economic impact, preserving both consumer demand and the formal retail ecosystem’s growth trajectory.
