The GST maze
We are now moving towards is a complex Goods and Services Tax (GST) with several slabs as well as relatively high tax rates
Is Kit Kat a chocolate or a biscuit? Is coconut oil considered hair oil or cooking oil?
These may seem trivial questions to be raised in a parliamentary debate before the formal shift to a radically new indirect tax structure in India. This newspaper has been a strong votary of the goods and services tax (GST). The new tax will integrate the internal market, tax final consumption rather than intermediate goods and help reduce tax evasion. However, the ideal GST should have had just three rates—essential commodities that would be free of tax, almost everything else taxed at a modest rate and a few sin goods that would attract a higher tax rate.
What we are now moving towards is a complex GST with several slabs as well as relatively high tax rates.
Hence the questions about Kit Kat and coconut oil—and the tax to be imposed on them. Each item produced could be the focus of intense lobbying.
This is just the sort of 1970s-style confusion that tax officials love but fiscal economists hate.
Editor's Picks »
- Deve Gowda-Siddaramaiah display rare bonhomie ahead of Karnataka by-polls
- Govt allocates Rs 144 crore to AYUSH ministry for alternative medicines
- Esperanto, A language whose time never came
- Q2 results: HDFC Bank net profit rises 20.6% to Rs 5006 crore
- Who is Manju, the Dalit woman devotee who wants to enter Sabarimala?
- Policy rethink and higher volumes to aid container shippers
- DCB Bank delivers a strong Q2 but pressure on margins foreseen
- Havells India: Rising costs give a jolt to profitability in September quarter
- All’s well at Mindtree, except for high client concentration risk
- India’s rising steel demand is making companies starry-eyed