Jayendra Tanna ,President of Gujarat Traders Federation has drawn Hon.Prime Minister Narendra Modi ji’s attention about grave injustice being done being done to Small Retailers selling O% goods, mainly Grocery stores in NextGen GST which is announced as A Great Beneficial Initiative for Citizens.
This sense of injustice is spreading among small traders across the nation as GST 0.2 is creating strange situations for them. The recent GST rate cuts on essential consumer goods, though hailed as a major relief for the common man, have triggered a severe crisis for lakhs of small and medium retailers. These traders are now stuck with massive stocks purchased under the earlier tax regime—on which full GST has already been paid. With no mechanism in place for refunds or adjustments, these businesses are facing significant financial losses. For India’s trading backbone, this oversight isn’t just an inconvenience—it’s a potential path to collapse.
Until now, these essential commodities attracted 12 to 18 percent GST. Traders across the country, many of them already struggling under debt, had paid this tax upfront on their inventory. But following the sudden zero-tax declaration in GST 0.2, these same goods have effectively become unsellable at previous margins. With no provision for tax refunds or input credit on existing stock, businesses are staring at unrecoverable losses that could average between 10 to 12 percent of their capital. In tight-margin retail markets, this kind of hit is not just painful, it is terminal.
This isn’t a theoretical loss. These are real goods sitting in real warehouses, bought with real money, much of it borrowed from banks. Traders are now expected to sell these products at the new market prices without any way to recover the tax already paid. The same tax that was meant to flow through the system as input credit now turns into a dead investment. For businesses running on credit, this is a dual blow. Interest continues to pile up while the government refuses to return the excess tax paid. The mismatch is not just a technical glitch. It is a financial sinkhole.
What is being billed as a bold pro-consumer move has become a cruel punishment for those who form the last mile of the supply chain. These traders, often family-run or single-shop businesses in small towns and urban localities, operate on razor-thin margins and limited liquidity. For them, this sudden GST reversal isn’t an adjustment, it’s a trap. They followed the law, paid the tax, stocked up goods ahead of festivals, and now they are penalized for obeying the system. The silence from policymakers on this gaping wound has only deepened the sense of betrayal.
The fallout is already visible. Sales are plummeting. Retailers are slashing prices in panic just to move stock, taking heavy losses in the process. Inventory that was once an asset has turned into a liability overnight. With the festive season approaching, traders are unsure whether to stock up again or retreat from the market entirely. This hesitancy will ripple across the economy. When small traders suffer, suppliers, transporters, and local workers lose out too. The domino effect is real and it’s already in motion.
What traders are demanding is not charity but fairness. A transitional mechanism, a credit window, or a refund route is essential to prevent mass closures. If the government can tweak rates overnight, it must also show urgency in correcting this structural injustice. Without this, the new GST reforms, despite their consumer appeal, risk becoming a massacre for small businesses. The nation cannot celebrate consumer savings while watching its traders bleed out in silence.
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