File Image
Congress has described the GST Council’s approval of an overhaul in the Goods and Services Tax regime as merely a “GST 1.5”, insisting that the wait for a “true GST 2.0” continues.
Congress general secretary (communications) Jairam Ramesh said a critical demand of the states — the extension of compensation for another five years to fully safeguard their revenues — was still ignored.
“In fact, that demand assumes even greater importance now,” he wrote on X.
“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.
Ramesh argued that the minister had finally acknowledged the limitations of GST 1.0. “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. It was meant to be a Good and Simple Tax. It turned out to be a Growth Suppressing Tax.”
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…
— Jairam Ramesh (@Jairam_Ramesh) September 4, 2025
On the latest changes, he remarked: “Last evening’s announcements have certainly made headlines since the PM had already laid down the pre-Diwali deadlines. Presumably the benefits of rate cuts will be passed on to consumers. 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.”
The GST Council, in its 56th meeting, cleared the next-generation reforms under an eight-year-old indirect tax regime. This effectively paves the way for a broad two-slab structure of 5 per cent and 18 per cent, with a demerit rate of 40 per cent only for super luxury, sin and demerit goods.
In a statement, former Union minister P Chidambaram said that the GST rationalisation and reduction of the rates are welcome, “but one is left with the thought that these steps are eight years too late”.
“I am happy that the government has realised that the path on which they had walked for 8 years was wrong, and done a U-turn. It should have always been a Good and Simple Tax… The middle and poor classes will heave a sigh of relief,” Chidambaram said.
