States will bleed, not celebrate: Opposition tears into Centre’s new GST reform

For the Centre, the GST overhaul is a festival-season relief measure meant to simplify taxes and boost consumption.

The GST Council this week approved sweeping reforms to India’s indirect tax system, collapsing multiple slabs into just two, 5 percent for essentials and 18 percent for most goods and services. A higher 40 percent rate will remain for luxury and sin goods.

The Centre pitched the overhaul as a major step towards simplification that would put more disposable income in the hands of consumers, making groceries, footwear, textiles, fertilisers and renewable energy products cheaper.

But while the BJP hailed it as historic, the opposition called it 'half-baked' and politically timed.

The Congress described the Modi government’s new Goods and Services Tax regime as GST 1.5, arguing that the wait for a true GST 2.0 continues.

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Congress president Mallikarjun Kharge accused the Centre of taxing essentials while easing corporate taxes.

“The Modi government changed One Nation, One Tax to One Nation, 9 Taxes. The Congress party had demanded GST 2.0 with a simple and rational tax system in its 2019 and 2024 manifestos. We had also demanded simplification of the complex compliances of GST, which had badly affected MSMEs and small businesses,” Kharge said.

“Two-thirds of the total GST, i.e. 64 percent, comes from the pockets of the poor and the middle class, but only 3 percent GST is collected from billionaires, while the rate of corporate tax has been reduced from 30 percent to 22 percent,” he added.

Kharge reminded that the UPA first announced GST in 2005, and accused Prime Minister Narendra Modi of opposing it as Gujarat chief minister before later doing a U-turn.

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Jairam Ramesh calls it growth suppressing tax

Congress general secretary Jairam Ramesh said the reforms stop short of protecting state finances.

“A key demand of the states, made in the true spirit of cooperative federalism, the extension of compensation for another five years to fully protect their revenues, remains unaddressed. It was meant to be a Good and Simple Tax. It turned out to be a Growth Suppressing Tax,” he said.

He also warned that the GST Council risks being reduced to a formality after Modi pre-announced reforms in his Independence Day speech.

“Faced with a lack of buoyancy in private consumption, subdued private investment, and endless classification disputes, the Union Finance Minister has finally recognised that GST 1.0 had reached a dead end. However, the wait for a true GST 2.0 continues,” Ramesh added.

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Chidambaram says changes are eight years too late

Former finance minister P Chidambaram welcomed the rate reduction but said it had come far too late.

“I welcome the reduction. The other truth is that it has been done eight years too late. We have always advocated a single rate, with a small plus or minus. This is a huge progress over the six or seven rates they had. In the course of time, I believe, it will come down to a single rate,” he said in Madurai.

Chidambaram recalled that former chief economic advisor Arvind Subramanian had flagged flaws in 2017.

“For eight long years, it was the middle class and poor people who were squeezed dry. At least now, I thank them for realising the mistake and correcting it,” he added.

Mamata Banerjee says protests forced the Centre’s hand

West Bengal Chief Minister Mamata Banerjee claimed credit for the exemption on insurance.

“I had demanded that insurance be exempted from GST. They were forced to do it. It was our protest that led to this change,” she said, while also accusing the Centre of financial discrimination against West Bengal.

Kerala supports cuts but seeks compensation

Kerala finance minister KN Balagopal said the state stands to lose Rs 8,000–10,000 crore annually under the new slabs but backed lower rates for consumers.

“The state may face an annual revenue loss of Rs 8,000 crore to Rs 10,000 crore but supports the GST rate cuts to reduce prices. The central government should ensure the cuts actually benefit the common man and provide compensation to states,” he said.

Tamil Nadu welcomes measures but flags revenue concerns

Tamil Nadu finance minister Thangam Thennarasu said the state supports simplification measures such as automated refunds and easy registration for small businesses.

“Revenue protection for states remains crucial,” he said.

Jharkhand says mineral-rich states are hurt

JMM MP Mahua Maji said Jharkhand had suffered thousands of crores in losses since GST’s introduction.

“Every year there will be a loss of Rs 2,000 crore because Jharkhand is very rich in minerals. Since the arrival of GST, Jharkhand has suffered losses of thousands of crores,” she said.

Manipur Congress dismisses reforms as eyewash

The Manipur Congress unit called the reforms a desperate political gimmick.

“The GST bonanza is nothing but an eyewash, a desperate political gimmick to cover up failures. Local weavers, small traders in Ima Keithel, transporters and small entrepreneurs suffered heavy losses since GST came in 2017. Now the BJP is trying to showcase itself as people-centric. True reforms must serve the common people and uphold federalism, not act as tools for BJP’s vote-bank politics,” state president Keisham Meghachandra said.

Other opposition voices raise sharp questions

Congress spokesperson Shama Mohamed: “This is not a historic decision. Rahul Gandhi had always objected to the five tax slabs; he always said there should be only two tax slabs. Like we all say, what Rahul Gandhi says is right, and the government takes time to accept his suggestions.”

Uttar Pradesh Congress panellist Surendra Rajput: “The BJP government has made India Assembled in India instead of Make in India. Our MSMEs were already ruined by Chinese goods. Now they have opened more sectors. The MSME sector will be further crippled.”
Samajwadi Party spokesperson Fakhrul Hasan Chaand:

“What is the price of flour today? What is the price of oil and rice? After all, whose stomach is filled with shampoo? When will petrol and diesel come under GST?”

For the Centre, the GST overhaul is a festival-season relief measure meant to simplify taxes and boost consumption.