Congress dubs GST as 'Growth Suppressing Tax'; claims it is plagued by 'high number of tax brackets'

The Congress on Sunday hit out at Prime Minister Narendra Modi after his televised address on GST reforms, calling the regime a “Growth Suppressing Tax” that continues to suffer from structural flaws and inadequate reforms.

“The Prime Minister addressed the nation today to claim sole ownership of the amendments made to the GST regime by the GST Council, a constitutional body,” Congress general secretary Jairam Ramesh said in a statement on X, shortly after Modi’s speech.

Ramesh said the Indian National Congress has long argued that “the GST has been a Growth Suppressing Tax. It is plagued with a high number of tax brackets, punitive tax rates for items of mass consumption, large-scale evasion and misclassification, costly compliance burdens, and an inverted duty structure (lower tax on output as compared to inputs).”


He added, “We have been demanding a GST 2.0 since July 2017 itself. This was a key pledge made in our Nyay Patra for the 2024 Lok Sabha Elections.”

Also read: PM Modi urges states to boost manufacturing, strengthen 'Aatmanirbharta' amid tariff challenges

'GST reforms inadequate': Congress

Ramesh claimed that the current set of reforms is inadequate and fails to address the most pressing concerns.

“The widespread concerns of MSMEs — the major employment generators in the economy — must be addressed meaningfully. Apart from major procedural changes, this involves further increasing the thresholds that apply to interstate supplies,” he said.



He also flagged sector-specific issues. “Sectoral issues that have surfaced — for instance in textiles, tourism, exporters, handicrafts and agricultural inputs — must be tackled,” he said.

Further, he called for incentivising states to widen the scope of GST. “States should be incentivized to move towards the introduction of state-level GST to cover electricity, alcohol, petroleum, and real estate as well,” Ramesh said.

The Congress leader also underlined the pending demand from states on revenue protection. “The 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 said.

Moreover, Ramesh questioned whether the reforms will deliver on growth. “Whether this round of GST changes — delayed by 8 years — will actually boost the private investment that is essential for higher GDP growth remains to be seen,” he said.

Also read: Income tax exemption, combined with GST reforms, will result in savings of Rs 2.5 lakh crore: PM Modi

At the same time, he pointed to India’s external imbalances and corporate climate.

“Meanwhile, the trade deficit with China has doubled in the last five years to cross $100 billion. And Indian business is crippled by fear and oligopolisation that is leading many to resettle abroad,” Ramesh said.

Modi sets the stage for GST 2.0

Speaking on the eve of the nationwide rollout of the next-generation GST reforms, Modi framed the changes as a major relief for citizens and a step toward economic growth. “From tomorrow onwards, 22 Sept, since sunrise, next gen GST reforms will come into place,” he said, calling it the beginning of a “GST Bachat Utsav.”

He highlighted the benefits for households, saying, “These reforms will bring with them a major relief for all Indians — including the poor and the middle class. You will be able to save and buy your favourite products with ease. In this festive season, everyone will celebrate with sweets.”

The Prime Minister also reminded citizens of the complexities of the earlier tax system. “India was dealing with different kinds of taxes from service to numerous others… Dozens of tax were making the tax system complex. For transporting goods from one state to another, many checkposts had to be passed, there were many hurdles. It was necessary to pull India out of this problem,” he said.

Modi added that the reforms would accelerate India’s growth story, make business easier, and support states in their race for development, positioning the GST changes as a “double bonanza” particularly for the neo middle class.