Bachat Utsav or Gabbar Singh tax? The truth on GST 2.0

India’s biggest tax overhaul since 2017 has arrived. GST 2.0 replaces the old four-slab structure with just two rates—5% and 18%—making household items, vehicles, electronics, and insurance cheaper, while luxury goods and tobacco remain heavily taxed. The Modi government hails it as a “Bachat Utsav,” but opposition leaders dismiss it as propaganda, reviving old taunts like “Gabbar Singh Tax.”

Yet the same critics conveniently forget that states pocket 40% of GST and have never cut their own VAT, especially on fuel. Hypocrisy aside, GST 2.0 is timely. Lower taxes can spur demand, revive investments, and expand health insurance coverage. As festivals boost consumption, GST 2.0 is more than politics—it is a reform with the potential to reshape India’s economy

The new Goods and Services Tax (GST) rates came into effect on Monday, making household items, automobiles, electronics, and insurance policies cheaper. This is the biggest overhaul since GST was introduced in 2017. The earlier four-tier system of 5%, 12%, 18%, and 28% has now been replaced with just two slabs—5% and 18%. Ultra-luxury items will attract 40%, while tobacco remains in the 28% plus cess bracket.

The government hails it as a “Bachat Utsav.” Prime Minister Modi and Finance Minister Nirmala Sitharaman argue that GST 2.0 reduces the tax burden on people, stimulates demand, and simplifies compliance. But opposition leaders are dismissive.

Mallikarjun Kharge mocked the government with the proverb, “Sau chuhekhake billi haj ko chali,” accusing Modi of looting people since GST’s inception. Rahul Gandhi has long branded GST the “Gabbar Singh Tax,” while others from the INDIA bloc called the reform “matam” (mourning), not “utsav.”

Yet these same critics conveniently ignore that states receive 40 per cent of GST collections. They blame the Centre for inflation—from milk to LPG to airfares—without admitting that non-BJP states too levy their own VAT and have consistently refused to cut it, especially on petrol and diesel. Hypocrisy runs deep: opposition leaders condemn at the Centre what they quietly pocket in their states.

The politics of hypocrisy

Before delving deeper into GST, it’s worth asking why such double standards dominate politics. Why do leaders skilled in rhetoric but lacking competence often rise to the top? Why do those with substance remain sidelined?

Aristotle warned of this pattern 2000 years ago. In Athens, he saw that people rarely chose leaders for wisdom or brilliance. Instead, they preferred the familiar and the comforting—even if those leaders lacked real ability to shape the future. Loud performers thrived, while capable architects of change were ignored.

This observation still holds true—from parliaments to corporate boardrooms. Politics rewards those who play roles, not those who solve problems. Thus, the same parties that once blocked GST or failed to implement it now take credit or cry foul, depending on which side of power they stand.

The Congress record

The Congress party’s stance on GST is a case in point. In 2011, the UPA government introduced GST in the Lok Sabha and set April 2012 as the rollout deadline.

The idea was to break fiscal barriers between states and ease business. The BJP, then in opposition, stalled the legislation. Ironically, when the BJP introduced its own version later, the substance was hardly different from Congress’s 2011 bill.

By 2015, Congress officially supported GST, as reflected in its own publications National Herald. Yet when Modi’s government rolled it out in 2017, Congress boycotted its launch, Rahul dismissed it as “Gabbar Singh Tax,” and now claims credit for reforms to its structure. This inconsistency weakens its case against GST 2.0.

State-level hypocrisy

The double standards extend to opposition-ruled states. Telangana Chief Minister A. Revanth Reddy now demands that the Centre reimburse Rs7,000 crore in revenue loss.

Yet during GST Council meetings, his finance minister raised no objections and approved GST 2.0 unanimously. Not a single state, BJP or otherwise, dissented.

So why the outrage now? It is easier to attack the Centre in public while quietly benefiting from consensus behind closed doors. This duplicity has become the norm in Indian politics.

GST 2.0 and its economic impact

Leaving aside politics, GST 2.0 arrives at a critical economic juncture. With the US imposing steep tariffs on Indian goods and Washington’s strategic shifts in South Asia, India needs stronger domestic demand. Lower GST rates during the festive season—from Navaratri to Deepavali—serve as a spending stimulus.

Early signs are positive. Maruti Suzuki sold 30,000 cars, Hyundai 11,000, and Tata Motors 10,000 in just days, buoyed by festive demand. Electronics and appliances—air conditioners, refrigerators, TVs—are no longer treated as luxuries but as essentials for middle-class households. Lower taxes make them more affordable, driving volumes and helping manufacturers reduce idle capacity. Maruti, for instance, had slowed its Gujarat plant due to tepid demand, but GST relief could revive investment.

This demand-side push is vital for India to compete with China. Price-sensitive consumers will respond positively, and higher sales volumes can offset states’ revenue losses. Moreover, reforms in insurance premiums, especially for health policies, are significant. Rising medical costs had made health cover unaffordable, particularly for the elderly and those without employer-provided insurance. Most of the private companies in India do not display magnanimity to extend this benefit to their employees. GST relief can expand penetration and reduce out-of-pocket expenditure, easing one of the biggest burdens on Indian households.

The more profound shift is psychological. Under the UPA regime, large appliances or cars were still seen as luxuries. Today, they are symbols of aspirational living, not extravagance. GST 2.0 acknowledges this change. By lowering the tax burden on such goods, the government signals confidence in India’s growing middle class.

This reform also aligns with a broader global trend where governments use consumption as an engine of growth. If implemented well, GST 2.0 can help India sustain its growth momentum despite external shocks, from trade tariffs to geopolitical tensions.

But beyond this theatre, GST 2.0 represents real progress. By simplifying slabs, reducing costs, and boosting demand, it has the potential to transform consumption patterns, revive investments, and extend crucial services like insurance.

Aristotle’s warning still echoes—society often elevates performers over problem-solvers. It is such leaders representing various political parties who are up in arms against the reforms. In GST 2.0, India has a chance to prove otherwise: that good policy, not just loud politics, can rise to the top.

(The author is a former Chief Editor at The Hans India)