The Congress party has accused the Union government of delivering only a halfway reform to the Goods and Services Tax (GST), arguing that its much-touted revamp still leaves key concerns unresolved.
Congress MP Jairam Ramesh called the recent decisions approved by the GST Council ‘GST 1.5’ rather than the ‘true GST 2.0’ promised to the country.
Ramesh claimed that the Centre ignored states’ demands for an extension of revenue-loss compensation, thereby weakening the principle of cooperative federalism.
“The Union Finance Minister has finally recognised that GST 1.0 had reached a dead end,” he wrote on social media, citing subdued private consumption, weak investment and endless classification disputes as evidence.
Criticism of Process & Substance
The Congress leader also questioned the independence of the GST Council, a constitutional body comprising the Union and state governments.
He argued that Prime Minister Narendra Modi had already announced the core decisions in his Independence Day speech, making the council’s meeting appear a formality.
According to Ramesh, a genuine GST 2.0 would rationalise rates, reduce the tax burden on mass-consumption goods, remove inverted duty structures, simplify compliance for MSMEs and broaden coverage, goals he said remain unmet.
The Congress general secretary for communications acknowledged that the government’s latest announcements have generated headlines. However, he issued a warning, cautioning that the promised benefits may not translate into sustained investment or relief for small businesses.
“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,” he noted.
Ramesh added that the failure to extend compensation to states for another five years ‘assumes even greater importance now’, given the fiscal pressures on state governments.
Until then, he said, the wait for a genuine second-generation GST reform will continue.
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
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