RAI Calls for a Flat 5% GST Rate Across Categories

The Retailers Association of India (RAI) welcomed the introduction of a cleaner two- slab GST framework, calling it a vital step towards simpler and fairer taxation. However, RAI has recommended a flat GST rate across categories to simplify the system, eliminate artificial barriers, and support the government’s Make in India initiative.

The industry body has urged the government to address structural flaws and category-specific issues to ensure that reforms translate into real benefits for both retailers and consumers.

RAI’s foremost concern relates to the existing price-based GST slabs, which it says create market distortions. According to the association, price thresholds encourage grey market activity, misreporting, and compliance challenges. They also disproportionately hurt organised retail, especially mid- and premium-priced products while discouraging domestic manufacturing.

The association has also raised alarms over the taxation of garments and footwear priced above INR 2,500, which are currently placed in the 18% slab. RAI argues that this undermines affordability for middle-class consumers and weakens organised retail as well as the garment sector.

RAI Recommends Taxing All Garments & Footwear at 5%

Categories such as wedding apparel, winter wear, artisan-made products, festive clothing, and traditional wear are particularly impacted. RAI recommends taxing all garments and footwear at 5% or, at the very least, setting a more reasonable price threshold for higher taxation.

On mobile phones, RAI has reiterated its long-standing position that they are essential goods in today’s digital economy and should not be treated as luxury items. At present, mobile phones attract 18% GST, which the association says restricts affordability and slows down digital adoption.

A lower 5% rate, it argues, would boost access to mobile connectivity, support the Digital India mission, and expand digital tools to the wider population.

Commercial Rentals at 5%

Another major issue flagged by RAI is the GST rate on commercial rentals, which stands at 18%. The association points out that renting is simply the right to use immovable property and not a service or manufacturing activity. Further, such properties are already subject to state-level levies including stamp duty, registration charges, and property tax. The additional 18% GST, RAI warns, locks up working capital and significantly impacts small and medium retailers across the country. It has urged the government to reduce the rate to 5% to ease pressure on retailers and remove inverted duty structures in key categories.