The Congress on Sunday accused Prime Minister Narendra Modi of taking “sole ownership” of amendments to the GST regime, while at the same time calling the reforms inadequate and falling short of addressing key demands raised by states.
A day before the new, reduced GST rates were to take effect, Modi addressed the nation and declared that the next generation of GST reforms would “accelerate India’s growth story, increase ease of doing business, and attract more investors.” He also urged citizens to promote swadeshi goods. According to him, with the onset of Navratri, a “GST bachat utsav (savings festival)” would begin, and when combined with the income tax exemption, it would amount to a “double bonanza” for the people.
Reacting sharply, Congress general secretary in charge of communications, Jairam Ramesh, wrote on X that Modi had sought to “claim sole ownership of the amendments made to the GST regime by the GST Council, a constitutional body.” He reiterated that his party has always considered the Goods and Services Tax as a “Growth Suppressing Tax.”
“It is plagued with a high number of tax brackets, punitive tax rates for items of mass consumption, large-scale evasion and misclassification, costly compliance burdens, and an inverted duty structure (lower tax on output as compared to inputs),” Ramesh remarked.
Ramesh argued that the current changes were insufficient. “We have been demanding a GST 2.0 since July 2017 itself. This was a key pledge made in our Nyay Patra for the 2024 Lok Sabha Elections,” he said. He noted that outstanding issues remain, especially with MSMEs — the country’s main employment generators. “Apart from major procedural changes, this involves further increasing the thresholds that apply to interstate supplies,” he added.
He went on to highlight sector-specific challenges, citing textiles, tourism, exporters, handicrafts, and agricultural inputs as areas that demand special attention. He further suggested that states should be incentivised to introduce state-level GST on sectors like electricity, alcohol, petroleum, and real estate.
“The 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,” he stressed. Ramesh also questioned whether reforms that were “delayed by eight years” would truly drive the private investment necessary for faster GDP growth.
He pointed to India’s widening trade gap with China as another indicator of strain. “The trade deficit with China has doubled in the last five years to cross USD 100 billion,” Ramesh said, adding that Indian businesses were being “crippled by fear and oligopolisation,” forcing many entrepreneurs to relocate abroad.
Meanwhile, from Monday, goods and services ranging from kitchen staples to consumer electronics are set to become cheaper as reduced GST rates on around 375 items come into effect. The reforms, negotiated by the GST Council — comprising both Centre and states — are scheduled to roll out on September 22, coinciding with the first day of Navratri.
Under the revamped regime, the earlier four-slab structure of 5, 12, 18 and 28 per cent has been replaced with a two-tier framework. Most goods and services will now fall under either the 5 per cent or 18 per cent brackets. Ultra-luxury items will attract a 40 per cent levy, while tobacco and allied products will continue to be taxed at 28 per cent plus cess.
Items of mass consumption such as ghee, paneer, butter, namkeen, ketchup, jam, dry fruits, coffee, and ice creams are among those to see reductions, as well as aspirational products like televisions, air conditioners, and washing machines.
With inputs from PTI
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