Daijiworld Media Network - New Delhi

New Delhi, Aug 30: Congress general secretary for communications, Jairam Ramesh, on Saturday called for comprehensive reforms to the Goods and Services Tax (GST) framework, insisting that consumers and state governments must not be shortchanged by upcoming changes.

With a key GST Council meeting scheduled for next week, Ramesh outlined a set of demands aimed at ensuring that any reduction in GST rates actually translates into benefits for the end consumer. He emphasised the need for a monitoring mechanism to track and enforce the passing on of tax cuts to consumers — a step he said is crucial to maintain public trust in the system.

Backing the proposed overhaul of the GST rate structure, Ramesh revealed that eight Opposition-ruled states — Karnataka, Kerala, Tamil Nadu, Telangana, West Bengal, Himachal Pradesh, Jharkhand, and Punjab — have extended support for rationalising the number of tax slabs and reducing rates on essential goods.

However, he cautioned that the fiscal hit from lower tax collections would disproportionately affect state governments. To address this, he proposed a compensation framework for all states for the next five years, using 2024–25 as the baseline year.

Ramesh also demanded that additional levies on sin and luxury goods — which may breach the proposed 40% GST ceiling — be devolved entirely to states, asserting that the current centralised collection of cesses and surcharges excludes states from a substantial revenue stream. According to him, nearly 17–18% of the Centre’s total revenue comes from such charges, none of which are shared with state governments.

“These concerns are not merely political,” he said. “They are backed by evidence, including recent research by the National Institute of Public Finance & Policy (NIPFP), the think tank under the Union Finance Ministry.”

The Congress leader also reiterated the party’s long-standing push for ‘GST 2.0’ — a complete revamp of the system to make it more equitable, transparent, and SME-friendly. He criticised the current compliance burden on micro, small, and medium enterprises (MSMEs), calling it “excessive and counterproductive.”

Ramesh urged the central government to move beyond what he called "headline management" and instead use the Council meeting as an opportunity to reinvigorate cooperative federalism.

“This is a moment to ensure that GST works for the people and respects the fiscal autonomy of states,” he said, “not just another PR exercise by the Modi government.”