Alterations to the GST scheme viewed as damage control measure by Chairperson of Indian Entrepreneurs Association
Prime Minister Narendra Modi's announcement of a review of the Goods and Services Tax (GST) provisions and proposed structural reforms has been met with a positive response from the Association of Indian Entrepreneurs (AIE). K.E. Raghunathan, National Chairman of AIE, has supported the initiative to simplify the GST slab structure by reducing multiple tax rates into two core slabs of 5% and 18%.
In his Independence Day address, Modi proposed that 99% of items currently under the 12% slab be moved to the 5% category, and about 90% of the 28% category be shifted to the 18% slab. Raghunathan, in a LinkedIn post titled "Cosmetic Tweaks (in GST rate cuts) Won't Heal Structural Damage," praised these reforms but called for more substantial changes.
Raghunathan has suggested a new GST model with 5% GST for goods priced below ₹5000, 5% GST for services, and 12% GST for all other goods. He further added that India needs a clean, logical structure, aligned with global norms, such as 0%, 8%, and 30%.
The AIE Chairman has criticised the government for choosing chaos over clarity in the GST structure, arguing that the recent GST rate rationalisation announcement is not simplification but another confusing cocktail: 0, 5, 18, and 40%. He also criticised the current GST Council decisions for being made behind closed doors, with no voice for entrepreneurs or seats for MSME bodies.
Raghunathan has emphasised the need to correct inverted duty structures, address classification-related issues within GST, ensure long-term clarity and stability in tax rates and policies, and raise the GST exemption threshold to ₹2 crore for both goods and services. These reforms, he believes, will stimulate demand by putting more money in the hands of consumers, benefiting both MSMEs and overall industry growth.
The rationalised GST structure is expected to facilitate ease of doing business, reduce compliance burdens, and contribute to achieving the Atmanirbhar Bharat mission and the vision of "Viksit Bharat @ 2047." Despite the positive response, the Association of Indian Entrepreneurs continues to express displeasure over the recently proposed GST changes, calling them "damage control" rather than reform.
[1] Atmanirbhar Bharat mission: https://www.mygov.in/atmanirbhar-bharat/ [2] Viksit Bharat @ 2047: https://www.mygov.in/initiatives/viksit-bharat-2047/
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