India’s GST world’s 'worst' tax regime, middle class contributing to govt's revenue collection: Congress

Calling the present system 'tax terrorism', the Congress leader Rangarajan Mohan Kumaramangalam hoped Prime Minister Narendra Modi will 'rectify the faulty' GST system.

Ahmedabad: The opposition Congress on Thursday called India’s GST the world’s “worst” such regime, accusing the government of being interested only in imposing new levies under the cover of rationalisation.

The country has reached a point where the middle class is propping the government’s tax revenue because corporates are not paying as much tax revenues due to a downturn in business, claimed party spokesperson Rangarajan Mohan Kumaramangalam here.

Calling the present system “tax terrorism”, the Congress leader hoped Prime Minister Narendra Modi will “rectify the faulty” GST system.

“We have a regime that has created one of the worst GST (Goods and Services Tax) systems in the whole world. In about 50 countries, there is a tax collection system equivalent to GST. But nobody has such complications which are put in our GST system,” he said.

“Just last month, Finance Minister Nirmala Sitharaman again tried to complicate GST even more by putting three different taxes on three different forms of popcorn,” said the Congress leader in the press conference.

He claimed that the middle class is shrinking and the ultra-rich and upper middle class are driving consumption. “So this government now wants to put everything in the luxury bucket and collect 28 per cent GST,” he said.

Kumaramangalam alleged that the government is now trying to tax the only people left who are actually buying products. “In the end, that consumption will also come down, resulting in further job losses,” he said.

Instead of focusing on the shrinking middle class and the tax burden on it, the government wants to collect tax from wherever it can, said the Congress leader.

“It will come up with some reason to impose new taxes and cess under GST in some sort of vague method of rationalisation. In the end, it will kill whatever consumption, which is already reducing, (happening) in our economy,” he said.

According to a new study, 64 per cent of India’s GST collection comes from the bottom 50 per cent of the population, claimed Kumaramangalam.

“We are going after the poorest of the poor. Half of the GST is taken from them. Such a tax system is the main reason why our economy is slowing down. Now it has become apparent and GDP numbers don’t lie,” he said.

Latest GDP figures suggest that every sector is suffering, he said. Six months ago, all companies had started complaining that demand had slowed down because the common men did not have enough money, said the Congress leader.

“For the first time, the amount of money collected from companies is less than the tax revenue collected from individual taxpayers which is going up. Corporate tax collection is up 1.2 per cent. While GST collection is up 12 per cent, income tax is up by 20 per cent,” he said.

The individual taxpayers are funding the government and new tax slabs are being introduced on goods consumed by the common public, he said.

“Today, there are nearly nine different rates of GST, starting from 0 per cent to 28 per cent. If we consider cess, some products like tobacco attract a 35 per cent tax,” he said.

According to Kumaramangalam, confusion about tax slabs is adversely affecting small businesses because compliance has become a huge challenge.

“This (compliance) is not an issue for large corporates because they have a separate department to handle it. These complications are benefiting large companies only. The economy is slowing down because the government is taking people’s money, leaving them with nothing to spend,” he said.

He batted for tax reforms saying they are needed to achieve a healthier GDP (Gross Domestic Product) growth of at least 8 per cent.

India’s economic growth rate is estimated to slip to a four-year low of 6.4 per cent in 2024-25, mainly on account of poor showing by the manufacturing and services sector, according to government data released on Tuesday.

“Congress had earlier proposed a GST system having only three slabs. The prime minister had adopted many of our promises, such as the apprenticeship scheme, in the past. Thus, we are confident that he will also rectify this faulty GST system because this has now become tax terrorism,” he added.