The case for GST simplification in India is clear: It is time to act

A GST regime with uniform rates based on clear data within a broad category would enhance fairness and reduce litigation

- T.C.A. ANANT is a visiting professor at the Institute for Studies of Industrial Development and former chief statistician of India

A recent clarification issued by the Goods and Services Tax Council in its December 2024 meeting, that caramelized popcorn would be grouped with sugar confectionery and taxed at 18%, attracted much criticism. Attempts to justify this by arguing that it helps control an epidemic of sugar-fuelled obesity weaken on considering the inconsistent approach taken to taxing sugar confectionery, which falls under HSN Code 1704. Taxation is not uniform: some items, like elaichi dana, chikki, gajak etc, attract 5% GST; others like 'boiled sweets' attract 12%; while the rest attract 18%. The reasons for this apparently arbitrary classification are not adequately explained. Some items are thought to merit preferential treatment for being 'traditional,' while others are perceived to be consumed by the affluent and therefore deserving of higher taxes.

The problem with such perceptions is that consumer preferences are dynamic; items which may have once been the exclusive preserve of the rich can quickly become those of mass consumption. A walk in any weekly haat-bazaar would reveal a variety of goods once available only in high-end department stores. The mobile phone best illustrates this, having graduated from being a status symbol to an essential component of our public policy of inclusion.