Chidambaram welcomes new GST reforms but says move is '8 years too late'

Senior Congress leader and Rajya Sabha MP P Chidambaram has welcomed the GST Council's rate rationalisation and rate cuts, while criticising the timing of the reforms as being “8 years too late".

In a post on X late Wednesday, the former Union finance minister said the current GST design and rates should not have been introduced in the first place. He added that the Opposition had consistently warned against these issues for years, but their objections were ignored.

“The GST rationalisation and the reduction in rates on a range of goods and services are WELCOME but 8 years TOO LATE. The current design of GST and the rates prevailing until today ought not to have been introduced in the first place. We have been crying hoarse for the last 8 years against the design and rates of GST, but our pleas fell on deaf ears,” Chidambaram wrote.

Questions over timing of reform

Chidambaram also questioned the government’s decision to announce sweeping changes after eight years of defending the structure. He speculated on the factors that may have influenced the Centre’s sudden change of stance.

He pointed to factors such as sluggish economic growth, rising household debt, falling savings, and the upcoming Bihar elections. He also hinted that trade tensions with the US, particularly the tariffs imposed by President Donald Trump, may have played a role.

Next-Gen GST reform

On Wednesday, Union Finance Minister Nirmala Sitharaman announced a comprehensive rationalisation of GST rates aimed at providing relief to households, farmers, businesses and the healthcare sector. Termed as the “next-Gen GST reform", the measures were described as a Diwali gift to the nation and are expected to lower the cost of living while boosting economic activity.

The 56th GST Council meeting decided to merge the 12 per cent and 28 per cent slabs into the 5 per cent and 18 per cent categories, effectively simplifying GST into two broad rates.