The proposed GST 2.0, according to the congress manifesto, will see a redesign of the GST Council, positioning it as the ultimate authority on all policy matters related to GST.
The Congress party recently unveiled its manifesto ahead of the Lok Sabha elections, promising significant changes to the current tax system in India. A key highlight includes the proposal for a GST 2.0, aimed at replacing the existing GST framework introduced by the current government led by Narendra Modi. The manifesto also pledges to maintain stable income tax rates throughout the party’s term if elected to power.
In its detailed 48-page manifesto, the Congress party highlighted concerns over what it described as a chaotic tax environment under the BJP government. According to Congress, the current Goods and Services Tax (GST) laws have placed undue financial burdens on countless traders and hindered free trade.
The proposed GST 2.0, according to the manifesto, will see a redesign of the GST Council, positioning it as the ultimate authority on all policy matters related to GST. The administration of GST laws will be split horizontally between the central government and state governments, with smaller GST payers falling under the purview of state authorities.
A central tenet of the new GST regime, as per Congress, will be a single, moderate tax rate (with some exceptions) aimed at easing the tax burden on the economically disadvantaged. Additionally, a portion of GST revenues will be allocated to panchayats and municipalities for local development initiatives.
Criticizing the BJP government’s tax policies, the Congress manifesto highlighted that despite claims of broadening the tax base through measures such as demonetization and GST, India’s overall tax-to-GDP ratio has remained stagnant over the past decade, limiting room for increased expenditure.
The party pledges to revamp India’s tax structure, emphasizing a focus on being “people-friendly” and “efficient.” It further commits to maintaining stable personal income tax rates throughout its tenure to provide clarity and stability for taxpayers in planning their finances over the medium-to-long term.
As part of its tax reform agenda, Congress promises to introduce a Direct Taxes Code aimed at promoting transparency, equity, and impartiality in the administration of direct taxes. Moreover, the manifesto includes a commitment to abolish the “angel tax” imposed on Indian startups, a move welcomed by the entrepreneurial community.
In the past, Congress has frequently criticized the existing GST regime, alleging that it disproportionately impacts small and medium businesses. The party’s proposed reforms aim to address these concerns and create a more conducive environment for economic growth.
Recent data from the finance ministry revealed a notable increase in GST collections for March 2024, reaching Rs 1.78 lakh crore—the second-highest collection on record. This surge was primarily attributed to a significant rise in GST collection from domestic transactions, marking a milestone with total gross GST collection for FY 2023-24 exceeding Rs 20 lakh crore.
The Congress party’s manifesto lays out an ambitious vision for tax reform in India, with the proposed GST 2.0 and a commitment to stable income tax rates garnering attention ahead of the upcoming elections.
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