Congress claims vindication after PM Modi proposes next-gen GST reforms

The Congress on Monday said it stands vindicated on its criticism of the "flawed" Goods and Services Tax after Prime Minister Narendra Modi promised a simplified GST structure.

Congress general secretary, communications, Jairam Ramesh claimed the economy has never recovered from the twin "Modi-inflicted shocks" of GST 1.0 and demonetisation.

"It was the Vijay Kelkar Committee report of 2004 that led to the first announcement of GST in Mr. P. Chidambaram's Budget Speech of Feb 28, 2006. Here, Dr. Kelkar and his colleagues offer their suggestions for a transformed GST 2.0," Ramesh said in a post on X. 

"The Indian National Congress stands vindicated on its criticism of the flawed GST 1.0 that was pushed through on July 1, 2017, giving the economy its second serious shock after the notebandi of Nov 8, 2016. The economy has never recovered from these twin Modi-inflicted shocks," the Congress leader said in his post. 

The Congress has been alleging that the GST 1.0 is flawed and there has to be one single tax, with Rahul Gandhi dubbing it as "Gabbar Singh Tax".

Prime Minister Modi on Sunday said the Centre has circulated the draft of the next-generation GST reforms among states and sought their cooperation to implement the proposal before Diwali.

He said the reform in GST would benefit poor and middle-class people, as well as small and big businesses.

Modi had announced the proposal to reform the GST law in his Independence Day speech on August 15 from the ramparts of the Red Fort.

The present GST tax rates of nil/zero on essential food items, 5 per cent on daily use products, 12 per cent on standard goods, 18 per cent on electronics and services and 28 per cent on luxury and sin goods will be replaced by two tax slabs of 5 per cent and 18 per cent plus a special 40 per cent top bracket for 5-7 demerit goods.

The proposed two-slab regime, if approved by the GST Council, will replace the current four slabs in the Goods and Services Tax (GST) regime, doing away with the 12 per cent and 28 per cent slabs.

The changes that have come about after nearly six months of deliberations and dozens of meetings have been conceived in a way to ensure that demand for tax tweaks does not arise, and also that input tax credit (ITC) does not get accumulated in the system.