How GST Cuts Will Impact Daily Life: Insights and Expectations

As the Government of India gears up for significant changes in the Goods and Services Tax (GST) ahead of the festive season, questions arise regarding the impact this will have on consumers and retailers alike. The recent announcement to reduce GST slabs from four to two—5% and 18%—is a move aimed at easing the financial burden on everyday items such as groceries, electronics, and even vehicles. With this adjustment, many are left wondering: what does this mean for prices and how prepared are retailers to adapt?

The Impending Price Changes

On September 22, 2025, the new GST rates will come into effect, which means that consumers can expect a reduction in the prices of essential goods. Retailers across the country have expressed mixed feelings about this change. Tejpal Singh, a grocery store owner in Noida, mentioned that they still have old stock and are unsure how to price it once the new tax rates apply. He stated, "We sell gradually, and until we receive new stock under the revised rates, we won't know the exact price adjustments. If future supplies come in at higher prices, we will need to adjust our selling price accordingly."

Retailers' Readiness for the Transition

The Chamber of Trade and Industry (CTI) has raised concerns about whether retailers can handle the transition smoothly. With many stores still holding onto goods purchased at the old GST rates, the potential financial strain on small business owners is significant. Brijesh Goyal, the CTI Chairman, explained that while larger companies like Reliance and DMart have the technological infrastructure to adapt quickly, smaller retailers may struggle. They lack the resources to update their pricing systems or manage old stock effectively, which may lead to confusion among consumers.

Practical Solutions for Retailers

To alleviate the burden on retailers, Goyal suggested implementing price adjustments through credit notes. For instance, if a dealer purchased a carton of soap under the previous GST rates, they could receive a credit when selling at the new lower price. This would help prevent losses for dealers while allowing consumers to benefit from lower prices. However, the challenge remains in ensuring that these adjustments are communicated clearly and that all stakeholders are aligned in their pricing strategies.

Consumer Expectations: Will Prices Really Drop?

Consumers are understandably eager to see how these changes will affect their wallets. The government has projected that items like milk—currently subjected to a 5% GST—will become significantly cheaper. Milk from brands like Amul and Mother Dairy is expected to drop to around ₹65-66 per liter post-GST, which could provide relief to households managing tight budgets. Many families are hopeful that this reduction in GST will lead to an overall decrease in living costs, especially as they prepare for the upcoming festive season.

A Mixed Bag of Preparedness and Hope

As we approach the implementation date, it’s crucial for both consumers and retailers to stay informed about these changes. While the intention behind the GST reduction is to make goods more affordable, the actual outcome will depend heavily on how retailers manage their old stock and communicate new prices to customers. Ultimately, this reform has the potential to benefit millions—if executed effectively. The coming weeks will be pivotal as we watch how the landscape shifts in response to these new tax regulations.