New Delhi: The Goods and Services Tax (GST) Council’s latest restructuring of tax slabs cutting down four categories to just two primary ones while exempting several everyday use services has triggered sharp political debate. While the government projects the move as a long-awaited correction aimed at easing compliance and stimulating consumption, the opposition Congress has accused the ruling Bharatiya Janata Party (BJP) of complicating the very system it once championed as “one nation, one tax.”
The Council has scrapped the 12% and 28% slabs, leaving only the 5% and 18% rates as the principal categories. Together, these two now account for nearly 74% of the GST collected nationwide. In addition, the Council announced relief measures such as exemption of GST on premiums for health and life insurance, a step expected to benefit households burdened by rising costs of essential services. At the same time, it introduced higher “sin taxes” on certain luxury goods, arguing that the state cannot forgo revenue entirely.
Congress president Mallikarjun Kharge was quick to strike back, alleging that the BJP had converted the simplified framework promised in 2017 into a maze of multiple rates and exceptions. “The slogan of ‘one nation, one tax’ has become ‘one nation, nine taxes’ with special rates of 0.25%, 1.5%, 3%, and 6% still cluttering the system,” Kharge said, reviving the party’s longstanding demand for what it calls “GST 2.0.”
Former finance minister P. Chidambaram also criticised the timing, arguing that the government had wasted eight years before undertaking a simplification that was both obvious and necessary. “We have been pointing out the flaws in design and rates since 2017, but our appeals were ignored. Now, amid sluggish growth, falling household savings, and rising debt, the government suddenly discovers the need for rationalisation,” he remarked in a post on X.
While the Congress struck a critical tone, other opposition leaders offered guarded approval. Shiv Sena (UBT) leader Priyanka Chaturvedi called the changes “a long overdue correction,” while Trinamool Congress MP Mahua Moitra reminded the government that West Bengal Chief Minister Mamata Banerjee had been pressing for GST relief on insurance for over a year.
Tamil Nadu’s finance minister Thangam Thennarasu, however, expressed concern that states might suffer revenue shortfalls as a result of reduced rates. He suggested either amending the Constitution to allow cess-sharing to continue or hiking taxes on luxury and sin goods to protect state finances.
The Centre has strongly defended the reform. Minister of State for Finance Pankaj Chowdhury described it as the “need of the hour” and dismissed suggestions that political timing or U.S. tariffs had influenced the decision. “These measures are about easing the burden on the middle class, farmers, and MSMEs. They simplify compliance, reduce litigation, and make GST truly citizen-friendly,” he said, adding that the changes are based on eight years of revenue data.
The BJP’s allies, including Bihar’s Janata Dal (United) and Andhra Pradesh’s Telugu Desam Party, endorsed the overhaul. JD(U) spokesperson Rajeev Ranjan called it a “festive season gift,” while Andhra Chief Minister Chandrababu Naidu described it as a “growth-oriented and pro-poor decision.”
Despite the celebratory tone from the government, questions remain about the long-term impact. Will the narrowed slabs actually boost compliance and spending, or will states’ fiscal concerns overshadow the relief to consumers? The Congress has dubbed the move “GST 1.5,” insisting that it falls short of the full-scale reform India’s businesses and households require.
For now, the simplified GST framework will roll out as one of the most significant tax changes since the system’s introduction, carrying with it both promises of efficiency and the weight of political contestation.