New Delhi, September 4: The Congress on Thursday termed the Goods and Services Tax (GST) Council’s latest overhaul of the GST regime as “GST 1.5,” saying that the wait for a “true GST 2.0” continues. The opposition party expressed skepticism over whether the changes would effectively stimulate private investment or ease the burden on MSMEs.
Congress General Secretary Jairam Ramesh noted that a key demand of states — the extension of compensation for five more years to protect revenues — remains unaddressed. “Faced with lackluster private consumption, subdued investment, and ongoing classification disputes, the Union Finance Minister has recognized that GST 1.0 had reached a dead end,” he said, adding that the Congress had highlighted flaws in the original design of GST as far back as 2017.
The GST Council, headed by Union Finance Minister Nirmala Sitharaman, approved a simplification of GST slabs, reducing them from four (5, 12, 18, and 28 per cent) to two standard rates — 5 per cent and 18 per cent — effective September 22, the first day of Navaratri. A special 40 per cent rate will apply to select items, including high-end cars, tobacco, and cigarettes.
The overhaul also includes rate cuts for everyday consumer goods and aspirational products for the middle class, such as ACs, washing machines, and ice cream. Premiums for individual and family health and life insurance policies will now be exempt from GST, down from the previous 18 per cent tax rate.
Finance Minister Sitharaman emphasized that all decisions were taken unanimously with no state dissent. She expressed hope that the new GST structure would boost domestic spending and provide relief to consumers amid ongoing economic challenges.
While the government has hailed the reforms as a major step toward a simpler and more consumer-friendly GST, Congress leaders have maintained that a comprehensive “GST 2.0” — addressing compliance burdens, inverted duty structures, and evasion — remains a long-term goal.
