Jairam Ramesh accuses PM of sidelining GST Council, calls reforms ‘GST 1.5’

Congress MP Jairam Ramesh on Thursday accused Prime Minister Narendra Modi of undermining the Goods and Services Tax (GST) Council, arguing that the PM pre-empted its decisions in his Independence Day address before the Finance Minister formally announced them.

“The Union Finance Minister has made major announcements last evening after the meeting of the GST Council, which is a constitutional body. However, even before the GST Council meeting, the Prime Minister had already proclaimed the substance of its decisions in his Independence Day speech of August 15th, 2025. Is the GST Council to be reduced to a formality?” Ramesh wrote on X.

Ramesh said the Congress had consistently pressed for a comprehensive GST 2.0 to fix flaws that, according to him, had crippled the current regime. “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, eases the compliance burden on MSMEs, and expands GST coverage,” he said.

He recalled that the party had warned against the design of the tax when it was introduced in 2017. “Faced with a lack of buoyancy in private consumption, subdued rates of private investment, and endless classification disputes, the Union Finance Minister has finally recognised that GST 1.0 had reached a dead end. In fact, the very design of GST 1.0 was flawed and this had been pointed out by the INC way back in July 2017 itself, when the PM had made one of his typical U turns and decided to introduce GST. It was meant to be a Good and Simple Tax. It turned out to be a Growth Suppressing Tax,” he said.

The Congress MP described the recent steps as half measures, dubbing them “GST 1.5”. “Last evening's announcements have certainly made headlines since the PM had already laid down the pre-Diwali deadlines. Presumably the benefits of rate cuts will be passed on to consumers. However the wait for a true GST 2.0 continues. 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. Meanwhile 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.

A day earlier, Finance Minister Nirmala Sitharaman had announced a rationalisation of GST slabs, merging the 12% and 18% rates into a simplified structure of 5% and 18%, while retaining 40% for sin goods. The government has projected the move as part of its “Next-Generation GST” plan aimed at spurring consumption and easing compliance.