The Goods and Services Tax (GST) Council has unleashed a dramatic overhaul of the GST system, prompting the Congress party to label it "GST 1.5" while arguing that the dream of a true "GST 2.0" remains out of reach. The revamp promises to make daily essentials like parathas, hair oil, ice cream, and even TVs more affordable, but questions linger about its impact on small businesses and economic growth.

Congress leader Jairam Ramesh took to X to voice concerns, pointing out that the new system fails to address a critical demand from states: extending compensation for another five years to safeguard their revenues. "This demand is even more vital now," Ramesh emphasised, highlighting the spirit of cooperative federalism.

The Congress has long pushed for a simplified GST 2.0—one with fewer tax slabs, lower rates on mass-consumption goods, reduced compliance burdens for micro, small, and medium enterprises (MSMEs), and an end to issues like tax evasion and inverted duty structures. However, Ramesh criticised the government, noting that Prime Minister Narendra Modi had already hinted at these changes in his August 15, 2025, Independence Day speech, raising questions about the GST Council's independence. "Is the Council just a formality?" he asked.

Also Read: Council To Decide GST Cuts, Relief For Middle Class

The revamped GST structure, announced by Union Finance Minister Nirmala Sitharaman, simplifies the current four-slab system (5%, 12%, 18%, and 28%) into a leaner two-slab model of 5% and 18%, effective from September 22, 2025—the start of Navaratri. A special 40% slab will apply to luxury items like high-end cars, tobacco, and cigarettes. Notably, premiums for individual and family health and life insurance policies are now GST-exempt, a significant relief from the previous 18% tax.

Sitharaman, briefing the media after a marathon GST Council meeting, stressed that all decisions were unanimous, with no objections from any state. The rate cuts aim to boost domestic spending and counter the economic impact of new US tariffs, making aspirational goods like air conditioners and washing machines more accessible to the middle class.

However, the Congress remains sceptical. Ramesh called the original GST, launched in July 2017, a "Growth Suppressing Tax" rather than the promised "Good and Simple Tax". He questioned whether "GST 1.5" will truly stimulate private investment, particularly in manufacturing, or ease the burden on MSMEs. "Only time will tell," he said, noting that while the changes may grab headlines, they fall short of a transformative GST 2.0.

As consumers anticipate lower prices on everyday goods, the debate over whether this overhaul delivers meaningful relief or merely serves as a pre-Diwali gesture continues to spark discussion.

Also Read: Congress Questions GDP Hype, Warns of Tariff Fallout