New Delhi,Sep.04,2025: GST 1.5 – this is how Congress leader Jairam Ramesh dubbed the latest GST reform, suggesting it’s merely a partial and provisional fix, not the true overhaul or GST 2.0 he has long advocated.
What Is GST 1.5?
GST 1.5 refers to the recent Goods and Services Tax (GST) changes approved by the GST Council and welcomed by Prime Minister Modi—featuring a simplified two-slab tax structure and significant relief for consumers, but falling short of addressing systemic issues.
Why Jairam Ramesh Labels It GST 1.5
Jairam Ramesh criticized the reform as a stopgap measure, arguing that it fails to deliver the comprehensive overhaul India needs. He stated that while these reforms bring festive relief, the long-awaited GST 2.0 remains elusive.
He voiced concerns that key structural demands—such as easing MSME compliance, minimizing classification disputes, inverting duty structure corrections, and rationalizing tax slabs—are still unmet.
Why True GST 2.0 Still Matters
The term GST 1.5 reflects the gap between current reforms and the comprehensive transformation GST 2.0 promises. Without deeper structural changes, it’s unclear if the latest action will stimulate private investment or ease burdens on small businesses.
Structural Flaws in GST 1.0
Ramesh highlights that GST 1.0 was deeply flawed from its design, introducing complexity, inverted duties, and compliance hurdles. These issues, first flagged by Congress in July 2017, persist and now require more than superficial amendments.
Congress’ Demands and Opposition State Concerns
Beyond criticizing the current reform, Ramesh, echoed by eight opposition-ruled states, calls for a five-year extension of GST compensation to offset revenue losses. They also demand that any excess levies on sin and luxury goods be fully transferred to states, not centrally retained.
Why the GST Council’s Role Matters
Ramesh questioned whether the GST Council—a constitutional body—is now reduced to a formality, since Prime Minister Modi announced the key reform elements in his August 15 Independence Day speech, even before the Council met.
Economic Implications of the Reform
- For Consumers: Everyday items (like toothpaste, TV, air conditioners) shift to reduced slabs of 5% or 18%—a welcome boost ahead of the festive season.
- For Sin & Luxury Goods: A new 40% slab targets items like tobacco and high-end cars.
- For Markets: The reform is expected to stimulate consumer demand, lift GDP growth by over 100 basis points, and boost consumer-driven sectors.
GST 1.5 may bring much-needed relief this festive season, yet the deeper “true GST 2.0”—promising simplicity, fairness, and growth—is still a vision calling for structural overhaul. Whether the government responds by initiating that deeper transformation remains a story to watch.
