New Delhi, Sept 4: With the GST Council approving a complete overhaul of the Goods and Services Tax (GST) regime, the Congress on Thursday termed it a “GST 1.5” and said time alone will tell whether it would stimulate private investment as well as ease the burden on MSMEs.
The opposition party asserted that the wait for a “true GST 2.0” continues.
Congress general secretary in-charge communications Jairam Ramesh said that a key demand of the states made in the true spirit of cooperative federalism ‘namely, the extension of compensation for another five years to fully protect their revenues’ remains unaddressed.
In fact, that demand assumes even greater importance now, he said.
The Indian National Congress has for long been advocating for a GST 2.0 that reduces the number of rates, cuts the rates on a large number of items of mass consumption, minimises evasion, mis-classification, and disputes, does away with inverted duty structure ‘lower tax on output as compared to inputs ‘eases the compliance burden on MSMEs, and expands GST coverage, Ramesh said on X.
He noted that Union Finance Minister Nirmala Sitharaman has made major announcements last evening after the meeting of the GST Council, which is a constitutional body.
“However, even before the GST Council meeting, the Prime Minister had already proclaimed the substance of its decisions in his Independence Day speech of August 15th, 2025. Is the GST Council to be reduced to a formality?” Ramesh said.
“Faced with a lack of buoyancy in private consumption, subdued rates of private investment, and endless classification disputes, the Union Finance Minister has finally recognised that GST 1.0 had reached a dead end. In fact, the very design of GST 1.0 was flawed and this had been pointed out by the INC way back in July 2017 itself, when the PM had made one of his typical U turns and decided to introduce GST,” he said.
It was meant to be a Good and Simple Tax. It turned out to be a Growth Supressing Tax, Ramesh said.
Last evening’s announcements have certainly made headlines since the prime minister had already laid down the pre-Diwali deadlines, he said.
Presumably the benefits of rate cuts will be passed on to consumers, he added.
“However, the wait for a true GST 2.0 continues. Whether this new GST 1.5, if it can be called that, stimulates private investment – especially in manufacturing – remains to be seen. Whether this will ease the burden on MSMEs, time alone will tell,” Ramesh said.
Common use items from roti/paratha to hair oil, ice creams and TVs will cost less, while tax incidence on personal health and life insurance will be brought down to nil after the all-powerful GST Council on Wednesday approved a complete overhaul of the tangled Goods and Services Tax (GST) regime.
The GST Council approved limiting slabs to 5 per cent and 18 per cent, effective from September 22, the first day of Navaratri.
Almost all personal-use items and aspirational goods for the middle class, like AC, washing machines, will see rate cuts as the government looks to boost domestic spending and cushion the economic blow of the US tariffs.
Premium paid for individual life insurance and health insurance (including family floater), policies too have been exempted from GST.
Earlier, such policies were subject to 18 per cent GST.
Briefing reporters after a marathon day-long GST Council meeting, Union Finance Minister Nirmala Sitharaman on Wednesday said all decisions were taken unanimously, with no disagreement with any state.
The panel approved simplifying the GST from the current four slabs – 5, 12, 18 and 28 per cent, to a two-rate structure – 5 and 18 per cent. A special 40 per cent slab is also proposed for a select few items such as high-end cars, tobacco and cigarettes.
The new rates for all products, except pan masala, gutkha, cigarettes, chewing tobacco products like zarda, unmanufactured tobacco and bidi, will be effective September 22, she said. (PTI)
