GST 2.0 – Impact, Problems and Solutions for Wholesalers & Retailers (w.e.f. 22.09.2025).
Summary: The transition to GST 2.0, effective September 22, 2025, reduces the tax structure from four major slabs to two: 5% and 18%, with a 40% rate for specific goods, and moving several essential items to a lower rate or exempt category (0%). This change, following the 56th GST Council Meeting, presents immediate operational challenges for wholesalers and retailers, particularly concerning existing high-rate inventory accumulated for the festive season. Key issues include reduced profit margins on old stock, the necessity to rapidly update pricing to comply with anti-profiteering rules, and the risk of incorrect billing due to outdated IT systems. To manage this transition, businesses should immediately prepare detailed stock statements, negotiate with suppliers for compensation on rate reduction, and revise selling prices, ensuring proper relabeling or stickering is done. Furthermore, they must update accounting software, train staff, reverse Input Tax Credit (ITC) on any goods that become exempt, and diligently monitor official notifications from the CBIC and Legal Metrology to ensure compliance and avoid penalties. Proactive management of inventory and pricing is necessary to navigate the changes, maintain customer trust, and potentially leverage the rate reductions to boost sales.
1. Background
GST slabs have been reduced from 5%, 12%, 18%, and 28% to only 5% and 18%. A new 40% slab has been introduced for sin goods / special category goods in place of 28%.
Several essential/daily use items (food, dairy, packaged foods, medicines, health insurance, etc.) have been shifted to a lower GST rate or made fully exempt (0%).
This has created practical difficulties for wholesalers and retailers, especially with stock held at higher GST rates as on 21.09.2025 (just before implementation).
2. Key Problems & Suggested Solutions:
Problem 1 – Stock held at higher GST rates as on 21.09.2025:
Many wholesalers and retailers have built up large inventories in September 2025 due to the festive season.
The rate reduction impacts profitability, pricing, and compliance.
Solution:
1. Prepare Stock Statement (HSN-wise, GST rate-wise, invoice-wise, quantity-wise), including goods in transit but already invoiced.
2. Classify stock – segregate old vs. new GST rates, estimate cost and margin impact.
3. Negotiate with suppliers/manufacturers for stock returns, credit notes, or discounts to compensate for reduced profit margins.
Problem 2 – Re-fixation of Prices (Anti-profiteering compliance):
Businesses must pass on GST rate reduction benefits to consumers.
Solution:
1. Reduce selling prices in line with new GST rates.
2. Re-label or sticker old stock (if required under Legal Metrology Rules).
3. Issue bills/invoices with revised prices.
4. Display notices in shops (e.g., “Price reduced due to GST rate change”) to build trust and avoid disputes.
5. Maintain records – revised MRPs, supplier communications, and new price lists to show compliance in case of audits.
Problem 3 – IT System / Accounting Updates:
Risk of incorrect billing due to outdated software or manual pricing.
Solution:
Immediately update billing/accounting software with new GST rates and POS rules.
Train accounts, purchase, and sales teams to ensure correct billing and margin calculations.
Problem 4 – Shifting Demand & Inventory Planning:
Reduced GST rates will increase demand for some products (e.g., exempted/low-rate items).
Solution:
Retailers should maintain higher stock levels of such items.
Wholesalers should push products that become more attractive after rate changes.
Use promotional campaigns like “GST Discount Offers” to attract customers.
Problem 5 – MRP / Labelling Compliance:
Old MRPs may not match revised GST-inclusive prices.
Solution:
Manufacturers must issue revised MRPs.
Existing packaging with old MRPs can be used with stickering or relabeling until the cut-off date notified by CBIC/State Legal Metrology.
Businesses should verify such notifications regularly.
Problem 6 – Refunds & Book Adjustments:
Wholesalers/retailers cannot claim refund of GST paid on higher-rate stock (unless Govt. notifies special relief).
Solution:
Utilize Input Tax Credit (ITC) on higher-rate goods against future tax liabilities.
Watch for special notifications from GST Council/CBIC regarding relief schemes.
Problem 7 – Treatment of Exempt Goods from 22.09.2025:
If goods become exempt from 22.09.2025, wholesalers/retailers cannot charge GST on them, though earlier purchases included GST.
Solution:
1. No GST to be charged on sales of exempted goods post 22.09.2025.
2. Revised MRPs/labels must reflect exemption.
3. Reversal of ITC:
As per Section 17(2) r/w Rule 42, ITC attributable to exempt stock must be reversed.
If separate records are maintained for taxable vs. exempt stock, proportionate reversal is not required.
4. Reversal should be done in the September 2025 GSTR-3B or as per CBIC instructions.
3. Conclusion:
The shift to GST 2.0 with two-rate structure (5% and 18%) is a landmark step in simplifying GST but poses immediate transitional challenges.
Wholesalers and retailers must:
> Maintain proper records,
>Adjust pricing in line with anti-profiteering rules,
>Reverse ITC wherever applicable,
>Stay updated on notifications from CBIC and Legal Metrology Departments.
> By proactively managing inventory, pricing, compliance, and communication, businesses can not only avoid penalties but also use this opportunity to gain customer trust and boost sales.
Disclaimer: This is a general advisory based on decisions of the 56th GST Council and knowledge purpose only. Please verify with GST Official Notifications before implementations.
THANK YOU.
Author Bio
Super Guruji..
thank you a lot l.