"Appreciate Centre for realising its mistake after eight years": P Chidambaram on GST reforms

Madurai (Tamil Nadu) [India], September 4 (ANI): Former Union Finance Minister and senior Congress leader P Chidambaram has welcomed the Centre's decision to rationalise GST rates to two slabs, stating that he appreciates the government for "realising" its mistake after eight years of its introduction on July 1, 2017.
He pointed out that the Congress party and several economists, including former Chief Economic Advisor Arvind Subramanian, had raised concerns about the tax structure when it was first implemented.
Speaking to reporters in Madurai, Chidambaram said, "I appreciate the government for realising its mistake after eight years. Eight years ago, when this law was implemented, it was wrong. At that time, we had advised that such a tax should not be imposed. The then Chief Economic Advisor, Arvind Subramanian, also advised that it was a mistake."
While thanking the NDA government for realising their mistakes, Chidambaram slammed Prime Minister Narendra Modi and his ministers for overlooking Congress's pleas about the shortcomings of GST, introduced in India on July 1, 2017, replacing previous indirect taxes under the 101st Constitutional Amendment Act, 2016.

The initial, unified tax structure featured multiple slabs, including 0%, 5%, 12%, 18%, and 28%, to apply to different goods and services based on their essentiality and luxury status.
"But at that time, neither the Prime Minister nor the ministers listened. We spoke about this many times in Parliament. I have written several articles. Many leaders and economists argued that this was incorrect and should be corrected. At least now, I thank them for realising the mistake and correcting it," the Congress leader stated.
Chidambaram noted that the middle class and poor people were "squeezed dry" by high tax rates, but welcomed the reforms, saying they would bring relief to these groups.
He said, "For eight long years, it was the middle class and poor people who were squeezed dry. The 12% and 18% rates have now been reduced to 5%. For all these years, it was the very same people who bore the burden of paying 12% and 18%. At least now, with a change of heart and better understanding, they have reduced these tax rates, and I appreciate them for that."
Earlier, in a statement issued, the Congress leader had criticised the Centre for being "8 years too late" in bringing these reforms.
He said that the GST should be "Good and Simple Tax."
The statement read, "GST rationalisation and reduction of the rates are welcome, but one is left with the thought that these steps are 8 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. 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. It should have always been a Good and Simple Tax. The middle and poor classes will heave a sigh of relief. The government and, in particular, the FM 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 56th GST council meeting decided to rationalise GST rates to two slabs of 5 per cent and 18 per cent by merging the 12 per cent and 28 per cent rates, which will come into effect from September 22, 2025.
5% slab consists of essential goods and services, including food and kitchen item like butter, ghee, cheese, dairy spreads, pre-packaged namkeens, bhujia, mixtures, and utensils; agricultural equipment like drip irrigation systems, sprinklers, bio-pesticides, micronutrients, soil preparation machines, harvesting tools, tractors, and tractor tires; handicrafts and small industries like sewing machines and their parts and health and wellness like medical equipment and diagnostic kits.
While the 18% slab consists of a standard rate for most goods and services, including automobiles such as small cars and motorcycles (up to 350cc), consumer goods like electronic items, household goods, and some professional services, a uniform 18% rate applies to all auto parts.
Additionally, there is also a 40% slab for luxury and sin goods, including tobacco and pan Masala, products like cigarettes, bidis, and aerated sugary beverages and on luxury vehicles, high-end motorcycles above 350cc, yachts, and helicopters.
Moreover, some essential services and educational items are fully exempted from GST, including individual health, family floater and life insurance, no GST on health and life insurance premiums and education and healthcare, like certain services related to education and healthcare are GST-exempt. (ANI)