Overhaul of the Goods and Services Tax (GST) labeled as GST 1.5, according to Congress; Anticipation for GST 2.0, deemed as the genuine version, persists.

Union Minister Nirmala Sitharaman recently announced changes to the Goods and Services Tax (GST) system in a bid to overhaul the ailing tax structure. However, whether the new GST 1.5 will ease the burden on MSMEs and stimulate private investment, particularly in manufacturing, remains uncertain.

In his remarks, Jairam Ramesh, Congress general secretary in-charge communications, claimed that the wait for a "true GST 2.0" continues. He expressed the expectation of a GST 2.0 that would lower tax on output as compared to inputs, reduce the number of rates, cut the rates on a large number of items of mass consumption, and ease the compliance burden on MSMEs.

Ramesh also criticised the design of GST 1.0, claiming that it has turned into a Growth Suppressing Tax. He further stated that the very design of GST 1.0 was flawed, a point that was made by the Indian National Congress party as early as July 2017.

The Congress has been advocating for a GST 2.0 that would minimize evasion, mis-classification, and disputes, do away with inverted duty structure, and expand GST coverage. Ramesh also emphasized the key demand of the states for an extension of compensation to fully protect their revenues remains unaddressed in the GST overhaul.

In a positive development, the GST Council has approved limiting GST slabs to 5 per cent and 18 per cent, effective from September 22. This move is expected to simplify the tax structure and bring clarity to the taxpayers.

However, whether the new GST 1.5 will ease the burden on MSMEs and stimulate private investment will be determined in the coming days. The Prime Minister had already announced the substance of the GST Council's decisions in his Independence Day speech on August 15th, 2025. It remains to be seen if the revamped GST system will live up to its promises and transform into a growth-boosting tax.

Overhaul of the Goods and Services Tax (GST) labeled as GST 1.5, according to Congress; Anticipation for GST 2.0, deemed as the genuine version, persists.