The Goods and Services Tax (GST) Council over the weekend approved tax changes for some items while deferring a few decisions. Gene therapy, for example, was made GST-free to encourage this emerging field of healthcare.
The rate for fortified rice kernels used in public distribution was slashed to 5% from 18%. But a proposal to lower GST on health insurance premiums was judged to require further discussion.
So too the idea of bringing aviation turbine fuel under the regime’s ambit. Nothing was done to relieve people of the impression that GST, while “good” for India, is far from “simple” as a taxation system.
Popcorn being in three rate slabs exemplifies its complexity. Sold loose with salt and spices, it attracts the merit rate of 5%, but if hawked pre-packaged, it’s charged 12%.
If the popcorn is caramelized, however, it gets reclassified as a sugary treat instead of a savoury snack, attracting an even higher rate of 18%. It’s a wonder that shiny sprinkles on it don’t bump it into the 28% luxury bracket.
Hair gets split over such items because politicians want taxes to be progressive. But indirect taxes are inherently regressive. It’s the job of direct taxes to ensure the rich pay more.
