The only certainty in life is death and taxes, the old punchline goes. The grim irony of the proverb is that both outcomes may be obscured until you get there.
Look no further than the goods and services tax (GST), whose character was clarified on Wednesday by the chairman of the panel on value-added tax. The GST was an opportunity to create a single, unified market in India—where firms didn’t have to jump across opaque and complicated state-level tax codes.
But that prospect has been shattered. As announced, the state-level GST will be a convoluted—and diluted—system with three rates: a standard rate, an essential commodity rate and a precious metals rate. That doesn’t include a list of exempted items and entire classes of goods—petroleum products and liquor—which are outside the purview of GST. Sounds complicated? Well, it is, and that’s precisely the problem.
GST was supposed to simplify tax codes across states. Instead, Indian business will continue to suffer tax obfuscation.