India's GST Conundrum: Why Congress Labels Current Reforms as '1.5' and Demands a True '2.0'

India's ambitious Goods and Services Tax (GST), introduced with the promise of a unified national market and simplified indirect taxation, remains a hotbed of debate. While the government regularly announces tweaks and adjustments, the opposition Congress party has sharply criticized these as superficial, branding them 'GST 1.5' and passionately advocating for a comprehensive 'GST 2.0'.

But what exactly do these labels signify, and why is the call for a deeper overhaul growing louder?

When GST was rolled out in 2017, it was hailed as a landmark reform, aiming to replace a labyrinth of central and state taxes with a single, streamlined system. The vision was clear: reduce compliance burdens, eliminate cascading taxes, and boost economic efficiency.

However, five years on, critics argue that the system, in its current avatar, falls short of its original promise, retaining much of the complexity it sought to eliminate.

The 'GST 1.5' critique from the Congress largely stems from the perception that while the government has indeed brought in changes – adjusting rates for various goods, refining compliance procedures, and introducing technology like e-invoicing – these are merely incremental.

They argue that these adjustments often come in response to business challenges or public outcry, rather than a fundamental re-evaluation of the tax structure. Key pain points persist: multiple tax slabs (0%, 5%, 12%, 18%, 28% plus cesses), complex input tax credit mechanisms, and the exclusion of crucial sectors like petroleum, alcohol, and electricity from its purview, which significantly limits its 'one nation, one tax' ideal.

In contrast, the demand for 'GST 2.0' envisions a truly simplified and efficient indirect tax regime.

At its core, this proposition calls for drastically fewer tax slabs, ideally moving towards a two-slab structure – a standard rate for most goods and services, and a lower rate for essential items. This would not only reduce classification disputes but also make the system more intuitive for businesses and consumers alike.

Furthermore, a 'true GST 2.0' would necessitate the inclusion of currently exempted items like petrol, diesel, natural gas, crude oil, electricity, and alcohol under the GST ambit. This expansion would complete the input tax credit chain, reducing costs for businesses, potentially lowering prices for consumers, and significantly boosting government revenue.

Proponents of 'GST 2.0' also emphasize the need for a more robust and responsive GST Council, one that prioritizes consensus and transparency over political expediency.

They suggest a simplified compliance framework, especially for small and medium enterprises (SMEs), and a more efficient dispute resolution mechanism. The sentiment is that while 'GST 1.0' laid the foundation, and 'GST 1.5' represents hesitant steps, a bold leap to 'GST 2.0' is essential to unlock the full potential of this transformative reform, making it genuinely beneficial for India's economy and its diverse populace.