GST cladding: BJP allies and opposition’s welcome move on rate rationalization – who said what

The Congress has termed the complete revamp of the Goods and Services Tax (GST) regime as ‘GST 1.5’ and said only time will tell whether it would boost private investment and ease the burden on MSMEs. The opposition party said the wait for a “real GST 2.0” continues.

Union Finance Minister Nirmala Sitharaman made major announcements on September 3 after the meeting of the GST Council, which is a constitutional body. The GST Council has approved limiting slabs to 5% and 18%, effective September 22, the first day of Navaratri.

The panel approved simplification of GST from the current four slabs – 5%, 12%, 18% and 28%, to a two-rate structure – 5% and 18%. A special 40% slab is also offered for a few selected items such as high-end cars, tobacco and cigarettes.

Here are the political reactions after the GST overhaul

Prime Minister Narendra Modi: The Union government had prepared a detailed proposal for rationalization of GST rates and process reforms, aimed at making life easier for the common man and strengthening the economy. “Happy to state that the GST Council, comprising the union and states, has collectively accepted the proposals submitted by the Union government on cuts and reforms in GST rates, which will benefit the common man, farmers, MSMEs, middle class, women and youth,” he said.

Congress: The Indian National Congress has long been advocating for a GST 2.0 that reduces the number of rates, reduces tariffs on a large number of mass consumption items, minimizes evasion, misclassification and disputes, removes the inverted duty structure (a lower tax on production compared to inputs), supports the compliance burden on MSMEs and expands the coverage of the TST.

P Chidambaram, Congress MP and former Finance Minister: Streamlining GST and reducing rates on a range of goods and services is welcome, but 8 years too late. The current design of GST and the rates prevailing till today should not have been introduced in the first place. We have been crying hoarsely for 8 years against the design and rates of GST, but our pleas have fallen on deaf ears.

Tamilnadu: The DMK welcomed the decision but expressed concerns for protecting the state’s revenue. Thangam State Finance Minister Thennarasu welcomed the automated provisional refund sanction mechanism for exports and inverted duty structure and supported the simplified registration mechanism for low-risk small businesses to enable ease of doing business.

N Chandrababu Naidu, Andhra Pradesh Chief Minister: We welcome GST reforms with revised slabs in daily essentials, education, healthcare and agriculture. This pro-poor and growth-oriented move will benefit all sections of society, from farmers to businesses.