On Sunday, September 21, 2025, the Congress party accused Prime Minister Narendra Modi of unilaterally claiming credit for the recent amendments to the Goods and Services Tax (GST) regime. They argue that the current reforms are insufficient, notably failing to address states’ crucial demand for a five-year extension of GST compensation.
This accusation comes a day before the new, reduced GST rates are set to be implemented. During a recent address, PM Modi passionately advocated for promoting ‘swadeshi’ (indigenous) goods, asserting that the upcoming generation of GST reforms would significantly boost India’s economic growth, simplify business operations, and attract more investments.
In his national address, Mr. Modi announced that a ‘GST bachat utsav’ (savings festival) would commence on the first day of Navratri. He promised that this, combined with existing income tax exemptions, would deliver a “double bonanza” for most citizens.
Jairam Ramesh, the Congress general secretary in-charge of communications, swiftly responded. He stated that the Prime Prime Minister’s address appeared to be an attempt to assert “sole ownership” over changes enacted by the GST Council, which is a constitutionally established body.
“The Indian National Congress has consistently maintained that the Goods and Services Tax has functioned as a ‘Growth Suppressing Tax’,” Ramesh declared.
He elaborated on the party’s concerns, stating, “The system is plagued by an excessive number of tax brackets, punitive rates on essential mass consumption items, widespread evasion, misclassification issues, burdensome compliance costs, and an inverted duty structure where the tax on output is lower than on inputs.” Mr. Ramesh conveyed these criticisms via a post on social media platform X.
He further highlighted, “We have been advocating for a GST 2.0 since July 2017, and this was a primary commitment outlined in our ‘Nyay Patra’ for the 2024 Lok Sabha Elections.”
Mr. Ramesh reiterated that the current GST reforms fall short, leaving numerous critical issues unresolved. These include widespread concerns among Micro, Small, and Medium Enterprises (MSMEs), which are crucial for generating employment.
He stressed, “Beyond significant procedural adjustments, it’s essential to further increase the thresholds applicable to interstate supplies.”
Ramesh also pointed out unaddressed sectoral challenges, citing examples in textiles, tourism, exports, handicrafts, and agricultural inputs, all of which require urgent attention.
The Congress leader emphasized the need to incentivize states to introduce state-level GST for sectors such as electricity, alcohol, petroleum, and real estate as well.
Crucially, Mr. Ramesh highlighted that a core demand from states, made in the spirit of cooperative federalism – namely, extending compensation for another five years to safeguard their revenues – remains entirely unaddressed.
He expressed skepticism, questioning whether these GST changes, which he noted were “delayed by eight years,” would genuinely stimulate the private investment necessary for robust GDP growth.
Adding to his critique, Mr. Ramesh highlighted that India’s trade deficit with China has more than doubled over the past five years, now exceeding $100 billion.
He further alleged that Indian businesses are currently paralyzed by a climate of fear and “oligopolisation,” which is compelling many entrepreneurs to relocate abroad.
Starting Monday, September 22, 2025, consumers can expect a range of goods and services, from daily kitchen essentials to electronics, medicines, equipment, and automobiles, to become more affordable. This is a direct result of reduced GST rates on approximately 375 items.
These reforms, meticulously crafted by the GST Council, which includes both central and state representatives, will officially commence on September 22, coinciding with the first day of Navratri.
The updated tax structure introduces a two-tier system: most goods and services will now fall under 5% and 18% tax slabs, while ultra-luxury items will incur a 40% tax. Tobacco and related products will remain in the 28% plus cess category.
Previously, GST was applied in four distinct slabs: 5%, 12%, 18%, and 28%. Additionally, a compensation cess was imposed on luxury goods and demerit or sin items. With the new rates, common household items such as ghee, paneer, butter, ‘namkeen’, ketchup, jam, dry fruits, coffee, and ice creams, alongside aspirational products like TVs, ACs, and washing machines, are anticipated to become more budget-friendly.