The GST Council’s approval of a complete overhaul of the Goods and Services Tax (GST) regime has been described by senior Congress leader and former finance minister P Chidambaram as a “U-turn.”ย
He remarked that the measures appear to be eight years too late. The GST Council on Wednesday approved a complete overhaul of the Goods and Services Tax (GST) regime. Common everyday items such as hair oil, ice cream, and TVs will cost less.ย
The tax incidence on personal health and life insurance will be brought down to nil. The GST Council decided to set tax rates at 5 pc and 18 pc, and this change will take effect from September 22, which is the first day of Navaratri.
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In a statement, Chidambaram said, “GST rationalisation and reduction of the rates are welcome, but one is left with the thought that these steps are eight years too late.” Congress, many economists and the middle and poorer sections of the people have, for years, pointed out that the design of the GST and the initial rates were wrong, but the government turned a deaf ear, the Congress leader said.
“I am happy that the government has realised that the path on which they had walked for 8 years was wrong, and done a U-turn,” Chidambaram said.
It should have always been a ‘Good and Simple Tax’, he said.
The middle and poor classes will heave a sigh of relief, Chidambaram said.
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“The government and, in particular, the FM (Nirmala Sitharaman) had defended the flawed design and the complicated multiple rates so far. It is heartening to see the FM and other government leaders applauding the changes made yesterday!” the Congress MP said in his statement on Thursday.
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Also Read: GST Council backs dual slab system of 5% and 18%: Sources
In a post on Wednesday night, Chidambaram said, “The GST rationalisation and the reduction in rates on a range of goods and services are WELCOME but 8 years TOO LATE.” The current design of GST and the rates prevailing until today ought not to have been introduced in the first place, he said.
“We have been crying hoarse for the last 8 years against the design and rates of GST, but our pleas fell on deaf years. It will be interesting to speculate on what drove the government to make the changes: Sluggish growth? Rising household debt? Falling household savings? Elections in Bihar? Mr Trump and his tariffs? All of the above?” he said.
Almost all personal-use items and aspirational goods for the middle class, such as air conditioners and washing machines, are expected to see price reductions as the government aims to stimulate domestic spending and mitigate the impact of US tariffs.ย
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Also Read: GST Council meet Day 1: New tax likely to be levied from Sept 22
Premiums paid for individual life insurance and health insurance, including family floater policies, have been exempted from GST. Earlier, such policies were subject to 18 pc GST. After a long day-long meeting of the GST Council, Union Finance Minister Nirmala Sitharaman briefed the reporters on Wednesday.ย
She said all the decisions made during the meeting were agreed upon by everyone, and no state had any objections. The panel approved simplifying the GST from the current four slabs – 5, 12, 18 and 28 pc, to a two-rate structure – 5 and 18 pc.ย
A special 40 pc tax rate is also suggested for certain items like luxury cars, tobacco, and cigarettes. The new rates for all products, except pan masala, gutkha, cigarettes, chewing tobacco products like zarda, unmanufactured tobacco and bidi, will be effective from September 22, she said.
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Also Read: New GST regime from Sept 22: 5pc, 18pc continue; 40pc on luxury