‘Where were these reforms when millions suffered?’: Opposition on GST rate changes

Opposition leaders on Thursday questioned the eight-year delay in revising the Goods and Services Tax slabs, asking why the reform was not introduced “when millions suffered”.

The GST Council cleared a new slab structure on Wednesday, revamping it into a primarily two-rate system from the current four-tiered one.

Congress MP Manickam Tagore criticised the Union government’s decision, stating that the measures came after eight years of economic strain on small traders, micro, small and medium enterprises, farmers, women entrepreneurs and the middle class.

The GST system took effect in July 2017, replacing several indirect taxes such as the Value Added Tax, the Central Excise Duty.

Tagore noted that his party colleagues, including leader of the Opposition in the Lok Sabha Rahul Gandhi, had previously raised concerns about the GST in its current form having not delivered the intended benefits of tax simplification and uniformity.

The Congress manifesto for the 2024 Lok Sabha elections had outlined an alternative GST framework that was “a single, moderate rate, an end to cess-raj, relief for the poor, equitable federal sharing, and taxpayer-friendly reforms”, Tagore said on social media.

He also questioned the timing of the Union government’s reforms, noting that Union Finance Minister Nirmala Sitharaman had previously refused to acknowledge problems with the current GST framework.

“Where were these reforms when millions suffered?” Tagore asked.

Congress leader Jairam Ramesh questioned if the GST Council, a constitutional body, had been reduced to a “formality”, noting that Prime Minister Narendra Modi had announced the decision to reform the system during his Independence Day address on August 15.

Ramesh said that the benefits of the rate cuts will “presumably” be passed on to consumers but flagged apprehensions, saying that one must wait to see the actual impact.

“One key demand of the states made in the true spirit of cooperative federalism – namely, the extension of compensation for another five years to fully protect their revenues – remains unaddressed,” he added. “In fact, that demand assumes even greater importance now.”

Congress leader P Chidambaram welcomed the changes to the GST rate slabs but added that they were eight years late.

“The current design of GST and the rates prevailing until today ought not to have been introduced in the first place,” the former Union finance minister said on social media. “We have been crying hoarse for the last eight years against the design and rates of GST, but our pleas fell on deaf [ears].”

Chidambaram questioned what had prompted the changes, asking if it was sluggish economic growth, rising debt, falling household savings, upcoming Assembly polls in Bihar or the tariffs imposed by the United States.

The Trinamool Congress welcomed the revised GST rates, describing it as a “victory for common people” that was “wrested from a tone-deaf regime that only listens when forced”.

The party said that West Bengal Chief Minister Mamata Banerjee had earlier warned Sitharaman that “taxing insurance premiums was cruel, anti-people, and would deter families from securing their future, leaving them vulnerable to financial ruin in times of crisis”.

Trinamool’s Rajya Sabha MP Saket Gokhale accused Modi of shamelessly “taking credit” for the cuts in GST rates.

He argued that the reductions happened only because the states, who are part of the GST Council, chose “to give up revenue for the benefit of people”.

“A collective decision between the Centre and States of India is NOT ‘a gift from Modi’,” Gokhale said on social media.

The revised GST system will comprise two slabs of 5% and 18%.

However, a 40% GST rate will be applicable to “sin goods” such as carbonated beverages and tobacco products, and luxury items such as large cars, Sitharaman announced after the 56th meeting of the GST Council.

The new rates will take effect on September 22 for most items, the minister said.