NEW DELHI, August 16: The Congress on Saturday stepped up its demand for a comprehensive rehaul of the Goods and Services Tax (GST), pressing for the early release of an official discussion paper on “GST 2.0” to enable wider national debate. The party said the reform must ensure GST evolves into a true “Good and Simple Tax” in letter, spirit, and compliance, instead of persisting as a “Growth Suppressing Tax” that it has become over the years.
The opposition’s remarks came a day after Prime Minister Narendra Modi, in his Independence Day address, promised next-generation GST reforms, including lowering rates by Diwali to ease the burden on households and boost economic activity.
Congress general secretary in-charge of communications, Jairam Ramesh, noted that the idea of a transformed GST 2.0 was not new, reminding that the party had made it a core pledge in its 2024 Lok Sabha manifesto. He said the prime minister’s recent announcement indicates an admission that economic growth cannot accelerate unless GST is radically reshaped to stimulate private consumption and investment.
Ramesh sharply criticized the current GST design, observing that the original spirit of the tax had been undermined by a multiplicity of rates, widespread exemptions, and loopholes that facilitated evasion. “There must be a drastic reduction in the number of tax slabs to eliminate disputes and confusion. Simplification must be balanced with safeguards so that states do not face revenue uncertainty,” he said.
The Congress further demanded that the GST compensation cess, which expires on March 31, 2026, be extended to cushion states during the transition to a rationalized structure. The party stressed the need to address the concerns of MSMEs, calling them the backbone of employment generation, and suggested higher thresholds for interstate supply taxation to reduce compliance burdens.
Sectoral reforms were also flagged as urgent priorities, with Ramesh highlighting difficulties faced by textiles, tourism, exporters, handicrafts, and agriculture-related sectors. Additionally, he urged states to be incentivised towards bringing electricity, alcohol, petroleum, and real estate under the GST framework, thereby broadening the tax base and ensuring more uniformity.
“The Indian National Congress demands an informed debate, backed by an official discussion paper, on this vital reform. GST 2.0 must truly embody the principle of a Good and Simple Tax, unlike the Growth Suppressing Tax it has degenerated into,” Ramesh said.
The Modi government, meanwhile, has signalled that it is preparing to replace the four-slab structure of 5%, 12%, 18%, and 28% with a simplified two-slab system — “standard” and “merit” — along with special rates for luxury and sin goods. PM Modi, while addressing the nation, assured citizens that essential items would see significant price reductions, promising a “double Diwali” for families and MSMEs alike.
Rolled out on July 1, 2017, GST was billed as India’s biggest indirect tax reform. However, eight years later, debates over its complexity, compliance challenges, and uneven economic impact continue to dominate the political and business landscape.