Taxation Gone Awry

A patent anomaly is that currently collection of GST, which is regressive in nature, affecting the poor and rich equally, is almost equal to that of the progressive direct taxes. In fact, GST collections are galloping so fast that the Government has discontinued publishing monthly collection figures for GST. Moreover, an overhaul of GST structure with a view to lessen incidence of GST on the poor is desperately needed. We definitely need an effort to make GST the Good and Simple Tax that it was intended to be

- Devendra Saksena The writer is a retired Principal Chief Commissioner of Income-Tax

During its 55th meeting, the GST Council clarified that tax treatment for popcorn would depend on its flavour and the way it was sold; while popcorn sold loose will be taxed at 5 per cent, GST on popcorn will increase to 12 per cent if it was sold in packets under a brand name, while caramelised popcorn would be taxed at 18 per cent. There is another twist; popcorn purchased with a movie ticket, will be taxed at the same rate as the movie ticket. This is not a needless complication dreamt up by an underworked bureaucrat; we have on the Finance Minister's authority that this was a well-debated change made by the GST Council.

Similarly, in another anomaly, while both cream and bun attract GST at 5 per cent, a cream bun is taxed at 18 per cent. With five rates and some articles like jewellery being taxed at special rates, GST has an exceedingly complicated structure. Most countries in the world have one rate for GST, some have two, but only four-five countries have five GST slabs. Then we have VAT on petroleum products and alcohol. This has made indirect taxation needlessly complicated, leading to multiple frauds that we read about every day.