In a grand Diwali bonus to the nation, the government has slashed GST on everything from everyday household items to cars and bikes. The GST Council's meeting on September 3 reduced the GST slabs from four to two, now set at 5% and 18%, removing the 12% and 28% slabs. As a result, products ranging from oil, soap, shampoo, milk, butter, clarified butter to televisions, fridges, and air conditioners have a new slab, reducing the tax. These new rates come into effect on September 22, 2025, and there is a significant question: will products indeed be cheaper for consumers by that date? We consulted retailers to understand their perspective...
Major Challenge with Old Stock
After the GST rate cut announcement on September 3, the concerns of retailers were clear. Would retail shop owners have to bear losses by reducing prices on September 22, and how might this affect their businesses?
Retailers expressed varied opinions. Tejpal Singh, managing a grocery store in Noida, explained that old stock fills retail outlets. As they gradually sell these items, the exact degree of reduction post-GST rate cut isn't immediately clear. If incoming stock is costlier, prices will match that increase. He noted that small-scale retailers sell in units of 100 grams to a kilogram, so a comprehensive view on price reduction will emerge over time.
Another retailer, Naresh, praised the GST reforms but underscored the practical impact. Selling items like lentils, sugar, and rice means their costs are only clear after new rates apply. While current stock remains at existing prices, future price reductions will follow when GST rates drop.
Question - How Prepared Are Retailers?
The Chamber of Trade and Industry (CTI) posed a crucial question following the government's GST cut on approximately 400 items and services, effective from September 22. These include food products, everyday items, electronics, cars, bikes, and even insurance policies, which will all become cheaper. According to CTI, the government aims for these benefits to reach the common people directly. But the pertinent question is: Are traders and retailers prepared to pass on the GST cut benefits to consumers in the coming days?
CTI Chairman Brijesh Goel highlights this dilemma, as stores and warehouses are packed with goods sold at old, higher rates. The principal challenge lies in reducing prices of old stock and delivering these savings to customers. Coordination is essential among manufacturers, distributors, and retailers to offer reduced prices on pre-existing stock.
Ways to Ease the Burden
Brijesh Goel offered solutions to ease the burden on retailers. He suggested price adjustments as a means to tackle the old stock issues. Companies might issue credit notes for products at old GST rates. For instance, if a dealer purchased a carton of soap at previous GST rates and now prices have decreased, the company would compensate the dealer accordingly, preventing losses and enabling customers to benefit from lower prices.
Source: aajtak
The CTI Chairman pointed out how retail giants like Reliance and DMart possess robust technological frameworks, readily updating billing software and POS machines. However, smaller retailers and neighborhood grocers may face hurdles due to the lack of technological resources.
According to Brijesh Goel, companies might opt to affix new MRP labels on products like soap, shampoo, toothpaste, and biscuits, or alternatively, increase product quantity in the existing packaging without altering the price.
The Major Challenge for Retailers
Brijesh Goel of CTI believes the government's newly set rates, effective September 22, pose a major challenge for small traders and shopkeepers, as passing the GST cut benefits to consumers while dealing with goods purchased at old rates could prove financially taxing.
