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GST Rate Cut: A Festival of Promises, Not Relief
Moneylife Digital Team 29 September 2025
Economy & Nation
The government’s much-touted cut in goods and services tax (GST) rates was meant to be a festival gift for consumers. Announced by PM Narendra Modi from the Red Fort on Independence Day and ratified by the GST council at its 56th meeting on 3–4 September, the measure reduced slabs from four to two. An official notification was issued on 17 September, making the new rates effective from 22 September — the first day of Navratri. In official publicity, this was sold as a “GST Utsav,” a bonanza in the run-up to Dussehra and Diwali.
 
On the ground, however, the promised relief has not been fully visible. Many retailers in Chennai, for example, have not passed on the GST rate cuts to consumers. Items such as bread, oil and paneer, which should have benefited from the reduced rates, remain priced as before, reflecting a lack of clarity or compliance among retailers. Retailers cited reasons such as old stock and MRPs not being updated by distributors. For instance, a 100% whole wheat bread priced at Rs50 should be sold at Rs47.5 after being placed in the 0% GST slab from the earlier 5%, but the MRP remained unchanged in most outlets. 
 
Part of the problem stems from the policy design. The Department of Consumer Affairs allowed manufacturers to sell pre-cut stock until 31 December 2025, permitting—but not mandating—MRP revisions through stickers or stamping. While this approach may have reduced wastage, it means that shelves could remain stocked with higher-priced goods for several months. Since most retailers rarely sell below MRP, consumers are unlikely to see benefits until old stocks are exhausted.
 
Other factors added to the delay. Many small traders and kirana shops had not updated their billing software in time, so point-of-sale systems continued to show the old GST rates. 
 
To monitor compliance, the government has encouraged consumers to report cases where GST reductions are not reflected in billing. Consumers who believe they are not receiving the benefits have been urged to file complaints through the National Consumer Helpline (NCH), which has introduced a dedicated category on its Integrated Grievance Redressal Mechanism (INGRAM) portal to streamline the process. Additionally, a toll-free number, 1915, and a WhatsApp number, 8800001915, have been set up to facilitate easy reporting. As of late September 2025, nearly 3,000 complaints have been registered, indicating widespread consumer concern over the implementation of the new GST rates. 
 
Implementation challenges, including old stock with outdated MRPs, delayed software updates and slow adoption of new rates by retailers, have slowed the rollout of GST 2.0. The government’s compliance window until 31 December 2025 means many consumers may not see immediate benefits. Media reports from multiple cities indicate that while taxes have officially been reduced, shoppers continue to pay the previous rates at the counter.
 
During the festive season, when household spending typically peaks, this gap between official announcements and the prices experienced by consumers has been noted in media coverage and consumer reports. By relying on consumer complaints through the NCH to monitor compliance, authorities have shifted enforcement away from proactive oversight, leaving the effectiveness of the GST reduction dependent on retailer cooperation and consumer vigilance.
Comments
fredericknoronha5
1 month ago
Keeping GST on printing and paper at 18% is bizarre. We're taxing knowledge. What's the justification for that?
Reply
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