Benefits of GST for Retail Sector

  •  Introduction:

1)   GST abbreviation stands for Goods & Service Tax. GST has been implemented from 1st July 2017 & has transformed the Indian Economy. It has centralized the State & Central tax & made it into 1 tax due to which paying taxes & filing returns have become easier. Businesses would now have to register only once under GST & which is applicable to across all states.

2)   Implementation of GST has different impacts & implications on various sectors, for some sectors, it is considered to be better whereas for some sectors it is worse.

3)   In this article will discuss the benefits of GST for the retail sector. The retail sector is considered to be the fastest growing sector. India’s ranking is 5th in the retail industry in the world. Hence it is very important to know the impact of GST on the fast-growing sector.



  •  Benefits of GST for Retail Sector:

1)   Reduction in Taxes:

  1. a)    Prior to GST, retailers have to pay different types of taxes such as CST, CAT, Octroi, Service Tax, etc.
  2. b)   Under the GST regime, all taxes are subsumed into One Single Tax which makes it easier for the retailers to understand & pay the taxes.

2)   Seamless ITC (Input Tax Credit):

GST will reduce the burden on the retailers, as it helps them to get set-offs from the taxes paid to start from the producer’s point to the customer’s point.

3)   Increased efficiency in the supply chain:

  1. a)    Retailers carried out their business in different states. After the establishment of GST, retailers are not required to maintain the warehouse in every state, which in turn, will be beneficial regarding the cost to retailers.
  2. b)   With the help of GST, it has become much easier to transfer goods that have flourished the transport industry as they can carry more goods from one location to different locations in the country.
  3. c)    The free-flowing of goods between Inter-State boundaries due to GST will also reduce the time for transporting of goods.

4)   Tax levied on Gifts & Promotional Items:

  1. a)    In the previous tax regime, the retailers would provide gifts or promotional items with products as their marketing strategies which do not attract any tax on such gifts or items.
  2. b)   However, under GST, if any retailer provides such gifts or promotional items then tax will be applicable to such items. Thus, this will help the retailers to re-think on their promotional strategies.

5)   Expansion of Retail Market:

  1. a)    GST has eradicated all the confusion of different taxes levied by both State & Central Government.
  2. b)   Now, Retailers have to register just once & they can carry their operations in all the states, which in turn, will help to expand their business beyond boundaries.

6)   Better strategies:

Implementation of GST has forced the retailers to re-think on the supply chain & the business model Strategies & to re-model their network which will open many doors of opportunities to expand their business.

7)   Reduction in compliances:

  1. a)    Under GST law, all the State & Central taxes are streamlined into one. Hence this makes the taxation & other policies very easy for the retailers.
  2. b)   Retailers would able to carry their business with more ease as they don’t have to waste their time in paying different taxes & filing different returns.

8)   Beneficial for Startups:

  1. a)    Retail sectors have started attracting a lot of startups as they have to register their business only once & also can claim the benefits of taxation for the startups under GST.
  2. b)   With the new policies, they would also be able to carry out business operations more freely which will attract more startups to join the retail sector.


Leave a Reply

Your email address will not be published. Required fields are marked *