The 55th GST Council meeting ended without any significant announcements. There was neither a decision on a rate cut on insurance premiums as widely expected, nor was there any discussion on rate rationalisation. Yet, in the sandy terrains of Jaisalmer on Saturday, the Council meeting made news for all the (dare we say) wrong reasons. It clarified that caramelised popcorns are confectionery products, though not salted (namkeen) ones, and therefore, should attract 18 percent GST (unpacked salted popcorns attract five percent and packaged salted popcorns 12 percent). The announcement led to a meme fest on social media, with users pointing out the complexity of the GST structure, far from the simple tax it was promised to be. People were also miffed at the ‘frivolousness’ of the exercise when more serious issues like GST on insurance premiums went unaddressed.
While it is true that with every passing year, the GST—once hailed as a good and simple tax—is becoming more complex, one cannot deny that tax rules, beyond a point, cannot be simple, howsoever hard one may try. Policymakers start with a simple structure, but litigation, court orders and interpretation ambiguities necessitate amendments and clarifications, adding layer after layer to the existing rules. The GST only amplifies this anomaly. The divergent tax rates of popcorn are only one of the many examples under GST. The issue of the tax rate of Malabar parotta is yet to be settled, with Advance Ruling Authority claiming it to be a ready-to-eat bakery product and, therefore, liable for 18 percent tax. The Kerala High Court rejected the authority’s order and put it in the five per cent slab.
Regarding taxes, authorities must keep coming up with clarifications and changes to deal with anomalies arising from court orders and disputes. In a way, adding layers to tax rules in a necessary evil. Yet, it is quite concerning that the GST is becoming ever more complex with every passing GST Council meeting. Maybe the government would have to overhaul tax rules every 10-15 years—making necessary omissions and simplifications—the way the government now plans with direct tax rules.