New Delhi: The controversy over GST on popcorn in India has highlighted the rising complexities in the tax system. What seemed like a simple matter—whether salted or caramelised popcorn should be taxed differently—has snowballed into a broader debate about the flaws and bureaucratic entanglements of GST.
Initially presented as a “Good and Simple Tax”, GST has become increasingly complex, with multiple categories and exemptions that create confusion and friction for both businesses and consumers.
The issue began when it was pointed out that salted popcorn was treated as a ‘namkeen’, subject to a lower GST rate, while caramelised popcorn was taxed as a ‘mithai’ at a higher rate. This distinction has raised numerous questions, especially as more variants of popcorn—like sugar-free caramelised popcorn—could potentially fit into different tax categories.
The finance minister’s explanation, which drew a distinction between ‘namkeen’ and ‘mithai’, failed to alleviate the confusion, instead highlighting how bureaucratic complexities often deepen rather than resolve issues.
Critics, including figures like T.V. Mohandas Pai and Krishnamurthy Subramanian, have called for GST simplification, arguing that the complexities create unnecessary friction and inefficiency, especially when the tax burden on items like popcorn is minimal in comparison to the overall GST revenue.
India’s reform efforts, exemplified by leaders like Dr. Manmohan Singh and P. Chidambaram, have historically sought to reduce bureaucratic red tape. However, as the GST system becomes more convoluted, it risks undermining these reforms, creating an environment ripe for tax evasion and corruption.
In Episode 1578 of #CutTheClutter, Editor-in-chief Shekhar Gupta discusses why simplifying GST is crucial to reforms in India’s tax system.
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