Inflation's Reckoning

The year 2024 will be remembered as a period of extraordinary global transformation.

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India's Goods and Services Tax, introduced with the promise of simplifying the tax structure, has once again come under scrutiny. The latest trigger is the multiple tax slabs applied to popcorn – 5 per cent for salted, 12 per cent for pre-packaged, and 18 per cent for caramelised. While the rationale for these distinctions lies in ingredient classifications, the broader implications reveal deeper flaws in the GST framework. The GST system was designed to unify India's fragmented indirect tax regime. Yet, its implementation has been marred by complexities and frequent rate revisions, leaving businesses and consumers grappling with confusion. The popcorn taxation episode exemplifies how hyper-technical inanities often take precedence over practical simplicity, making everyday items subject to disproportionately detailed scrutiny. At the heart of the issue is the challenge of balancing revenue generation with fairness and ease of compliance. While the government defends its logic – highlighting differences in product character due to added sugar or packaging – such explanations alienate the public. When consumers see varying tax rates for popcorn but no relief on essentials like health insurance, the system's priorities come into question. For senior citizens, an 18 per cent GST on health insurance premiums is not just a financial burden but a reflection of misplaced policy obduracy. The discontent is not confined to popcorn taxation. The public's growing frustration stems from the perception that the GST system is maliciously complicated, benefiting only those who can exploit its loopholes. This perception of inequity threatens to undermine public trust, a cornerstone for the success of any tax regime. Beyond popcorn, larger issues within the GST framework demand urgent attention. Evasion remains a significant problem, with over Rs 2 lakh crore lost to fraud in the last fiscal year. Input tax credit misuse, fraudulent company registrations for