GST Had Serious Birth Defects, Worsened Over Last 5 Years: P Chidambaram

The Congress on Friday demanded that the current Goods and Services Tax (GST) law should be scrapped and a new one with a single low slab be brought in its place, claiming the existing law has "serious birth defects" which have "wrecked" the country's economy.

The Congress made the demand even as Prime Minister Narendra Modi hailed the GST as a major tax reform, saying it furthered 'Ease of Doing Business' and fulfilled the vision of 'One Nation, One Tax'.

"We mark #5YearsofGST, a major tax reform that furthered 'Ease of Doing Business' and fulfilled the vision of 'One Nation, One Tax'," PM Modi said in a tweet.

PM Modi tagged a tweet by Citizen engagement platform of the government of India 'MyGovIndia' which said the GST has played a key role in defining new India's economic structure and empowering citizens.

The Congress also demanded consultations with all stakeholders and an all-party meeting to seek the views of all parties, especially non-BJP and work out a new law which should be simple.

Senior Congress leader and former finance minister P Chidambaram said the Congress completely rejects the current GST regime and promised to work towards its replacement and bring GST 2.0 with a single, low tax.

"The GST had serious birth defects. In the last five years these defects have only become worse and all those touched by GST have been seriously injured." He also said the Congress will administer the law in a manner that the GST revenues will be shared fairly and equitably between the Centre and the states in a manner that will promote the growth of business, especially small businesses, and bring back the lost jobs.

"The first thing that has to be done is to get rid of these six rates. You have to have a single low rate, that is GST. The world over, that is GST," Mr Chidambaram told a press conference on the fifth anniversary of GST implementation.

"It has to be a single low rate, that is a starting point. If you make an error at the starting point, your entire travel on the path will be wrong. So let us scrap this GST, let's go back to the drawing board and start with a single low rate. Then let's work out the further steps," Mr Chidambaram said.

Noting that there are serious problems about tax levied by two authorities, the former finance minister said half the tax payers come under the Centre's jurisdiction and half the tax payers under the states' jurisdiction.

"It's a vertical division, whereas logically if you have to divide the administrative powers, it has to be a horizontal division. The small tax payer, the small businessmen, should not have to go after the central tax collector. There are any number of absurdities in this law and I think it is very difficult to correct this law and we will have to replace the law." Congress leader Rahul Gandhi took to twitter to say that the BJP has turned the Congress' 'Genuine Simple Tax' into a 'Gabbar Singh Tax', making the GST a "nightmare" for doing business in India.

Congress general secretary Jairam Ramesh also demanded that there is a need for review of the GST applicable on medium, small and micro enterprises (MSMEs) as only big companies, chartered accountants and lawyers were the only ones benefitting from its implementation.

"There is a need to review the GST applicable for MSME sector," he said, calling for its complete overhaul and reassessment for the sector.

Ramesh said the government should discuss the GST law in the upcoming session of Parliament on how it is creating problems for the industry and demanded that an all-party meeting be also convened to discuss the law and change it after taking views of all.

He also said there should be flexibility in the GST regime and compensation cess collected by the Centre for four more years be shared with states.

Questioning the government's reluctance to call an all-party meeting, Mr Chidambaram said it must listen to all parties, especially the non-BJP party's finance ministers, and amend the GST laws and substantially modify the manner in which the GST law is being administered.

The worst consequence of the GST brought in by the government has been a complete breakdown of trust between the Centre and states, he claimed, adding there is nothing really to celebrate its anniversary.

"The entire set up of the GST, especially the voting pattern is completely skewed. It will only favour the centre and the Centre's views and it will deepen the distrust between the Centre and the states." Questioning the GST Council's decision to collect cess for another four years, he asked, "why is a cess being collected? If it is not to be shared with state governments, why is this compensation cess being collected? Is the Centre collecting the compensation cess to compensate itself? The compensation cess is to compensate the states for their short fall. If you don't take that decision, why are you levying a compensation cess to compensate yourself? It is an absurd situation."

Mr Chidambaram claimed that what the country has today is a complex web of many rates, conditions, exceptions and exemptions that will leave even an informed taxpayer completely bewildered.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)