As far as the Congress Party is concerned, we reject the current GST and we will work toward the replacement of the current GST by GST 2.0 that will be a single, low rate: P Chidambaram – Fmr Union Minister

Congress – INC India:

Congress Party Briefing by Shri P Chidambaram and Shri Jairam Ramesh at AICC HQ.

Today, GST celebrates its 5th birthday. There is nothing really to celebrate. GST had serious birth defects. In the last five years these defects have only become worse and all those touched by GST have been seriously injured.

The Congress Party wishes to make it absolutely clear that the so-called GST that is in force today was not the GST envisaged by the UPA government.

I had made it clear on the floor of Parliament that the GST of our conception was a single, low rate across all goods and services with few exemptions.

We may remind you that the current GST law was passed against the express advice of the then Chief Economic Adviser whose recommendations were contained in an official publication titled Towards a Revenue Neutral Rate.

The GST that we have today is a complex web of many rates, conditions, exceptions and exemptions that will leave even an informed tax payer completely bewildered. As a result, they are at the mercy of the tax-collector.

After 5 years of GST, there is no rationalisation in the number of returns to be filed. Compliance with e-way bill and e-invoicing is no simpler.

Various provisions of the GST laws have still not been implemented and, instead, the government has resorted to stop-gap or “temporary” arrangements, some of which have lasted 5 years. Claiming refunds is a nightmare.

In five years, the government has issued 869 notifications, 143 circulars and 38 orders! That is a change every second day! This is a GST that is flawed, defective and unstable.

A flawed GST has led to large-scale destruction of the MSMEs, a sector that contributes upto 90% of the jobs in the manufacturing sector. Many small units have simply gone out of business.

The only beneficiaries of the flawed GST are big businesses, chartered accountants and tax lawyers.

VAT and GST were introduced on the basis of mutual trust and to promote cooperative federalism. But the manner in which the GST laws were passed and are being administered have deepened the distrust between the Centre and the States.

The skewed formula on voting rights of the Centre and the States has been used by the Centre to push through decisions that are bitterly opposed by the States including, privately, by BJP-ruled States.

The holding back of the arrears of Compensation Cess and the excessive resort to cesses (rather than shareable taxes) has increased the chasm between the two sides.

Despite the promise in 2017, no State has achieved an annual revenue growth of 14 per cent. The States have filled the gap through the Compensation Cess but, in two years, the gap was filled through a back-to-back loan.

The delaying of fiscal transfers to the States during the Covid-19 pandemic when they needed it the most came as a shock.

The States, collectively, have felt betrayed by the Centre and several finance ministers have expressed their regret and anguish publicly. Some of them have gone to the extent of demanding a re-think on GST.

As far as the Congress Party is concerned, we reject the current GST and, as promised in the Election Manifesto of 2019, we will work toward the replacement of the current GST by GST 2.0 that will be a single, low rate.

We will administer the law such that the GST revenues will be shared fairly & equitably between the Centre & the States & in a manner that will promote the growth of business, especially small businesses, and bring back the lost jobs.

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