New Delhi/Bengaluru [India], September 4 (ANI): The Centre’s sweeping reforms to the Goods and Services Tax (GST) have sparked sharp criticism from Congress leaders Jairam Ramesh and Priyank Kharge, who accused the government of undermining the GST Council and burdening the poor and middle class while offering little relief to states.
Congress MP Jairam Ramesh questioned whether the GST Council had been reduced to a “formality,” citing Prime Minister Narendra Modi’s Independence Day address in which he had already announced the substance of tax reforms later endorsed by the constitutional body. “The Union Finance Minister has made major announcements after the meeting of the GST Council, which is a constitutional body. However, even before the Council met, the Prime Minister had proclaimed its decisions in his August 15 speech. Is the GST Council to be reduced to a formality?” he wrote on X.
Ramesh said the Indian National Congress had long been advocating for a “GST 2.0” that would simplify the tax structure by reducing rates on mass consumption items, eliminating the inverted duty structure, easing compliance for MSMEs, and expanding GST coverage. He argued that GST 1.0 was flawed from the outset and had turned into a “Growth Suppressing Tax” instead of the “Good and Simple Tax” it was meant to be. He added that while the latest reforms may provide relief to consumers, the wait for a true GST 2.0 continues, especially as states’ demand for a five-year extension of compensation remains unaddressed.
Congress leader Priyank Kharge echoed these concerns, branding the original GST structure as “Gabbar Singh Tax” and saying that “One Nation, One Tax” had effectively become “One Nation, 9 Taxes.” In a post on X, Kharge pointed out that GST had multiple slabs — 0%, 5%, 12%, 18%, 28%, and special rates of 0.25%, 1.5%, 3%, and 6% — complicating compliance and hurting MSMEs, small businesses, and farmers.
He stressed that the burden of GST fell disproportionately on the poor and middle class, who contributed 64% of the total GST collection, while billionaires paid only 3%. “The government has finally adhered to our demands of rationalising and simplifying GST, but they are yet to figure out how they will compensate the losses to states like Karnataka,” he said.
Both leaders highlighted that Congress had consistently called for an 18% GST cap in its 2019 and 2024 manifestos, warning against excessive taxation of essential items such as packaged milk, wheat flour, curd, books, and farm-related goods. Kharge also criticised the imposition of GST on at least 36 farm sector items under the BJP, ranging between 12% and 28%.
Finance Minister Nirmala Sitharaman, following the 56th GST Council meeting, announced consolidation of the 12% and 18% slabs into a simplified dual rate structure of 5% and 18%, with a 40% rate reserved for sin goods. Essential household products including hair oil, shampoos, soaps, toothpaste, toothbrushes, and shaving cream were moved to the 5% slab. UHT milk, paneer, and all Indian breads were exempted from GST, while food items like pasta, noodles, chocolates, coffee, butter, and ghee were reduced to 5%.
The reforms also offered relief to farmers, with tractor tyres and parts now attracting 5% GST instead of 18%, and tractors themselves reduced from 12% to 5%. In addition, GST on individual health and life insurance has been scrapped entirely.
While the government has hailed these steps as part of its “Next-Generation GST” reforms aimed at boosting affordability, consumption, and economic efficiency, Congress leaders insist the changes fall short of the real overhaul — a true “GST 2.0” — that India’s economy and federal structure require.
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