"Congress Declares 1.5 GST, Urges 'Authentic GST 2.0' While Calling for State Compensation"

In a significant development, the Indian government has approved a complete overhaul of the Goods and Services Tax (GST) regime, aiming to simplify the complex compliances and reduce the multiple rates that have long been a source of concern for small and medium-sized enterprises (MSMEs) and small industries.

The GST Council, the apex body responsible for making decisions on GST matters, has approved the reduction in GST rates, effective from September 22. The reduced rates will apply to common use items such as roti/paratha, hair oil, ice creams, and TVs, among others. These items were previously taxed at 18%, but will now be subject to lower rates.

The tax incidence on personal health and life insurance will be brought down to nil, a move that is expected to provide relief to many. The GST Council has limited the slabs to 5% and 18%, eliminating the previous complexities in the tax structure.

The Congress party, which had demanded a simplified and rational tax system in its 2019 and 2024 manifestos, has termed this as "GST 1.5" and is still waiting for a "true GST 2.0". Senior Congress leader P Chidambaram described the GST overhaul as a "U-turn" and said it is eight years too late.

Chidambaram also stated that the middle and poorer sections of the people have been pointing out for years that the design of the GST and the initial rates were wrong, but the government turned a deaf ear. However, he expressed happiness that the government has realized the path it had walked for 8 years was wrong and done a U-turn.

The GST Council's decision to simplify the tax structure comes amidst criticism from various quarters, including the opposition parties, who have long been demanding a simplified GST system. The Congress party president, Mallikarjun Kharge, has stated that the party has been demanding simplification of GST for almost a decade.

It is important to note that the BJP, the ruling party in India, had initially opposed the GST when it was first proposed in 2011. However, when Prime Minister Narendra Modi was the chief minister of Gujarat, he also opposed the GST. Interestingly, the Modi government later changed 'One Nation, One Tax' to 'One Nation, 9 Taxes', including tax slabs of 0%, 5%, 12%, 18%, 28% and special rates of 0.25%, 1.5%, 3% and 6%.

The government that approved the overhaul of the GST regime in 2025 in India was led by Finance Minister Nirmala Sitharaman, representing the ruling Bharatiya Janata Party (BJP). The government had defended the flawed design and complicated multiple rates of GST until now, but has now taken steps to address these issues.

This overhaul of the GST regime is expected to bring about a significant change in the Indian tax structure, making it more simplified and beneficial for MSMEs and the common people.

"Congress Declares 1.5 GST, Urges 'Authentic GST 2.0' While Calling for State Compensation"