Tense Wait For GST Cut

“For us, it might be easier to clear out stock within the next two months, but what about wholesalers who have stocks worth six months in their godowns,” asked the owner of a general store in Begumpet. “We also won’t sell our stock at a loss. Products will continue to be sold at old prices until companies send new stocks with revised price tags.”

Mukesh Choudhary, who runs a provision store in Mahendra Hills, agreed that changes at the retail level would be slow. “Who would sell their products at a loss? For us, new stock with updated prices will likely come only by November. Even then, consumers will see real benefits only on select items such as cosmetics, tea, coffee, household and cleaning products. For milk, dairy products, water, or cold drinks, there won’t be much difference,” he said.

“The real challenge lies with wholesalers and supermarkets, as they must clear out bulk stock first,” he added.

The Telangana Paper Merchants’ Association welcomed the exemption of GST on notebooks but criticised the continued 18 per cent levy on raw paper. “The rollback of GST on paper and boards from 18 per cent to five per cent is not a concession but a corrective necessity,” said Secretary Ashish Jain Bansal. “It will help reduce education costs for students, encourage recycling and eco-friendly paper bags, and support FMCG, pharma, and food industries with affordable packaging.”

He pointed to a glaring anomaly in GST: notebooks are taxed at zero per cent, but the paper used to make them attracts 18 per cent. “This means raw material is heavily taxed while the finished product is not. Publishers and notebook manufacturers cannot claim input tax credit, which locks up working capital and raises costs. Instead of simplification, the paper sector is now trapped under three confusing slabs — zero per cent, five per cent, and 18 per cent. This runs contrary to the government’s aim of making GST simple, transparent, and uniform,” he said.

Irshad Ahmad, a chartered accountant and GST expert, said retailers are bound to sell products at revised rates under the Legal Metrology (Packaged Commodities) Rules, 2011. “Companies must update prices on unsold stock immediately. If that’s not possible, they can sell products with both the old and revised prices, but only until December 31, 2025, or until stocks are cleared, whichever comes first,” he explained.

“Many retailers have already declared they will pass on GST benefits to consumers. Price reductions will reflect the prevailing rate, and cuts will be visible on items such as food, stationery, and medicines. If consumers feel prices are not reduced, they can lodge complaints. The real challenge is with products where GST has been completely removed, such as certain medicines. In such cases, the choice lies between bearing the cost or passing it on to customers. Even in areas where GST has only been reduced, unsold inventory locks up working capital, forcing retailers to sell at lower prices until stocks are exhausted,” he added.