The association has urged the Goods and Service (GST) Council to consider the broader economic implications and explore more balanced approaches to achieve higher collections
The Retailers Association of India (RAI) has expressed concern over the proposed goods and service tax (GST) rate increases, stating that they could have far-reaching consequences on both the formal retail sector and consumer sentiment. The association has said that steep tax increases could make formal businesses less competitive, pushing smaller players and traders towards parallel and unorganised markets.
Raising its concerns, the association highlighted that high GST rates will affect discretionary spending. With consumption under pressure, such tax shocks will exacerbate the slowdown, impacting overall sales and growth in the sector.
“Increasing GST rates will hurt formal retail businesses and encourage unorganised markets to grow. This could undo the progress made in formalising businesses under the GST regime. To boost GST collections, the focus should be on lowering rates and improving compliance, not raising taxes that burden consumers and disrupt the retail sector,” stated Kumar Rajagopalan, CEO, RAI.
Noting that the GST regime has been pivotal in formalising businesses in India, fostering a structured retail ecosystem, RAI stated that many illegal players may not adhere to the new norms, especially online—to thrive and this shift risks undoing years of progress in building trust and compliance within the formal retail system.
The industry body further added that many international brands report that a significant portion of premium product purchases by Indian consumers occurs outside the country and the proposed move by the Council could undermine the Centre’s Make in India initiative, further delaying the growth of this segment domestically.
“While we understand the government’s need to boost GST collections, increasing tax rates is counterproductive. Lowering rates and strengthening compliance mechanisms can expand the tax net more effectively without hurting consumer spending or sales,” as stated by RAI.
RAI has urged the GST Council to consider the broader economic implications and explore more balanced approaches to achieve higher collections without harming the formal retail ecosystem or consumer sentiment.
