Need of hour radically-simplified, less-punitive GST 2.0: Congress
“The Finance Minister has declared that GST rates will be reduced soon. The Indian National Congress reiterates that any changes in GST must be more comprehensive than a mere rate reduction,” he said. Reducing the tax on caramel popcorn, without fundamentally reforming a system that has three rates of tax for popcorn, is just window-dressing, the former Union minister added.
The need of the hour is a radically-simplied and less-punitive GST 2.0, he said. “The rst objective of GST 2.0 must be to simplify the tax slabs. The three-slab tax system for popcorn, and the dierential tax rates for cream buns and regular buns are only the tip of the iceberg,” he said. As the Narendra Modi government’s former chief economic advisor, Arvind Subramanian, has acknowledged, the Goods and Services Tax (GST) has up to 100 dierent rates, including cesses, the Congress leader pointed out.
“This complexity increases the compliance burden on businesses and the government bureaucracy. The multiplicity of rates has facilitated alarming GST evasion of Rs 2.01 lakh crore, almost double the Rs 1.01 lakh crore reported in FY23,” he claimed, adding that “18,000 fraudulent entities have been uncovered; many more are likely undetected”.
The complexity of the current GST regime reects a lack of seriousness on the government’s part to enforce a truly “Good and Simple Tax”, Ramesh said. “Second, a key issue in recent months has been the slowdown in GST net collections due to high refunds.
Data from December 2024 showed that net GST collections, after adjusting for refunds, slumped to 3.3 per cent growth partly due to the 45.3 per cent increase in refunds to taxpayers,” he said. While some part of this increase in refunds is certainly credible, a signicant component of these refunds is likely fraudulent, he claimed.
“The complexity of the GST system — especially when combined with a software system that is ridden with loopholes — has allowed for large-scale fraud,” the Congress leader alleged. Input Tax Credit (ITC) fraud is particularly common, with more than Rs 35,132 crore worth of fraud identied, amidst a recovery rate of just 12 per cent, he noted.
