BJP hails GST reforms as 'historic measure' to help common people, Oppn seeks 5 yrs more compensation to states

New Delhi, Sep 4 (PTI) The BJP on Thursday hailed the GST reforms as a historic measure that will benefit every section of society, while Opposition parties demanded that states be given compensation for five years for revenue losses.

The Opposition parties also hoped that reduction in rates would be passed on to consumers, even as the Congress said this reform is "GST 1.5" and wait for the "true GST 2.0" remains.

Wide-ranging reforms were announced by the GST Council on Wednesday, doing away with tax slabs of 28 per cent and 12 per cent, and initiating only two slabs of 5 per cent and 18 per cent under the tax regime.

West Bengal Chief Minister Mamata Banerjee took credit for the GST Council decision to slash tax rates, saying, "I had demanded that insurance be exempted from GST. They were forced to do it. It was our protest that led to this change." "You imposed anti-people decisions, increased the tax burden, and then entered into understandings with 3-4 countries. But we stood our ground," Banerjee said, alleging financial discrimination by the Centre against West Bengal.

Kerala Finance Minister KN Balagopal said the state is expected to face an annual revenue loss of Rs 8,000 crore to Rs 10,000 crore due to GST rate cuts.

Balagopal made it clear that the state supports the GST rate cuts that will reduce prices but the central government should ensure that the rate cut benefits are passed on to the common man.

He said that compensation should be provided for states but the issue was not taken seriously during the GST Council meeting.

Hailing the reforms, BJP president J P Nadda said this is a "bumper gift" given by Prime Minister Narendra Modi to people ahead of Durga Puja and Diwali.

He also slammed the Congress for finding faults with the measures taken by the GST Council, saying it exposes the opposition party's double standards as Rahul Gandhi opposes decisions supported by finance ministers of state governments run by his party. All decisions of the GST Council, he asserted, were taken by consensus.

Nadda said the Congress-led UPA government could not even implement the GST because states did not trust it. On the contrary, the Congress at that time robbed poor people and traders through Value Added Tax (VAT) and left ample scope for tax evasion, he claimed.

The Modi government instead realised the concept of 'one nation one tax' by rolling out the GST in 2017, he said.

Congress president Mallikarjun Kharge said his party has been demanding simplification of GST for almost a decade.

"The Modi government changed 'One Nation, One Tax' to 'One Nation, 9 Taxes'. It included tax slabs of 0%, 5%, 12%, 18%, 28% and special rates of 0.25%, 1.5%, 3% and 6%," he said.

"The Congress party had demanded GST 2.0 with a simple and rational tax system in its 2019 and 2024 manifestos," he said.

On February 28, 2005, the Congress-UPA government formally announced GST in the Lok Sabha, he claimed, adding that in 2011, when the then finance minister Pranab Mukherjee brought the GST Bill, the BJP opposed it. He also said that when Modi was chief minister of Gujarat, he had strongly opposed GST.

"Today, this same BJP government celebrates record GST collections, as if it has done a great job by collecting tax from the common people. For the first time in the history of the country, farmers have been taxed. This Modi government imposed GST on at least 36 items of the agricultural sector," Kharge said.

He claimed that the Modi government imposed GST on everyday things like milk-curd, flour-grains, even children's pencils-books, oxygen, insurance and hospital expenses.

"That is why we named this GST of the BJP as 'Gabbar Singh Tax'," Kharge said.

"Two-thirds of the total GST i.e. 64% comes from the pockets of the poor and the middle class, but only 3% GST is collected from billionaires, while the rate of Corporate Tax has been reduced from 30% to 22%," he said.

Congress general secretary in-charge communications Jairam Ramesh said that a key demand of the states made in the true spirit of cooperative federalism, namely, the extension of compensation for another five years to fully protect their revenues, remains unaddressed.

It was meant to be a Good and Simple Tax. It turned out to be a Growth Suppressing Tax, he said, adding that benefits of rate cuts should be passed on to consumers.

"However, the wait for a true GST 2.0 continues. Whether this new GST 1.5, if it can be called that, stimulates private investment - especially in manufacturing - remains to be seen," Ramesh said.

Senior Congress leader and former finance minister P Chidambaram described the overhaul as a "U-turn", saying these steps are eight years too late. "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," he said.

Several Congress leaders claimed that former party chief Rahul Gandhi had suggested the changes to GST regime years ago and the government eventually had to "follow his advice".

Responding to this, BJP spokesperson Sambit Patra said he is "staying in la la land" and that is not going to bring any dividend to his party.

"Who had stopped Rahul Gandhi and his party from bringing the GST before 2014? it shows their own inefficiency," Patra said, listing a range of items from household goods to farm sector products to medical items to highlight that all were charged a much higher VAT when the Congress was in power.

With the reduced GST applicable from the first day (September 22) of Navratri, there is a sense of "euphoria" in the country, as it has brought a smile on everyone's face, he said, alleging that the Congress lacked courage to implement it.

The Congress' claim, he said, is akin to its "garibi hatao" slogan since Independence but its governments could never remove poverty, he said.

The party believes the Sun and moon moves due to the Gandhi family and there would be no India but for them, he said mockingly.

In a swipe at Rahul Gandhi, Patra said the Congress leader should stop making atom bomb and hydrogen bomb and focus on his work.

If he keeps silent, then the Congress' fortunes may go up slightly as his speeches only harm his party, Patra claimed. PTI ASK PNT KR SKC ZMN