Multiple tax slabs, inconsistent categorisations, and frequent reinterpretations have created a system that often feels neither 'good' nor 'simple'
The Goods and Services Tax (GST), hailed as a transformative reform for India’s fragmented indirect tax system, was envisioned to embody the principle of “One Nation, One Market.” Seven years since its launch, however, the GST system has yet to shed its baggage of complexity and operational faux pas.
The recent GST Council meeting, instead of addressing pressing demands such as reducing tax rates on life and health insurance premiums, turned its focus to the taxation of popcorn – an issue that exposes the cracks in the system’s foundational principles.
The worry is this: From salted debates to caramelised confusion, GST Council meetings seem to have become India’s favourite public entertainment — part drama, part comedy, and always leaving taxpayers with a bitter aftertaste.
The Council’s recommendation of GST rates — 5% for unpackaged salted popcorn, 12% for pre-packaged versions, and 18% for caramelised popcorn — has drawn severe criticism across social media, particularly for its perceived arbitrariness.
Social media commentators have mocked the rationale, calling it a reflection of “brainless bureaucracy” that penalises the up gradation of products. While such commentary may veer into hyperbole, it does underline a significant issue: the persistent lack of coherence and predictability in GST’s implementation.
In the great Indian tradition of gratitude, we often hear the phrase “desh ka namak khaya hai,” symbolising our duty to the nation. But under the current GST regime, even the simple act of eating namak seems to come with a price tag of complex tax slabs.
Salted popcorn falls under one tax rate, caramelised popcorn another — perhaps soon we’ll need a PhD to figure out how much of “desh ka namak” we’re paying for. In a system meant to unify taxation, why does every bite we take feel like navigating a maze of bureaucratic seasoning?
As Union Finance Minister Nirmala Sitharaman justified, “Caramelised popcorn comes with added sugar, so the treatment of rate is different from namkeen.” The larger question remains: should the GST Council not prioritise systemic reforms and rationalisation over granular deliberations on popcorn taxation?
The government might dismiss the popcorn controversy as overblown, but it reflects growing public cynicism toward the complexities of the current GST structure. Every GST Council meeting, unfortunately, seems to resemble a “Grand Scheme of Talks.” Instead of simplifying GST structures, the Council appears to complicate them further, creating room for compliance issues, arbitrary interpretations, and litigation.
A government that campaigned on “minimum government, maximum governance” now finds itself grappling with an over-regulated GST framework that contradicts its core philosophy. These also deepen the confusion for taxpayers and create unnecessary friction between businesses and authorities.
Simplified taxation is not just about easing compliance; it is a tool for increasing voluntary tax payments and improving trust in the system. Every unnecessary complexity undermines the GST’s credibility and its original purpose.
Before GST’s introduction in 2017, India’s indirect tax system was a labyrinth of central and state levies. GST was supposed to replace this with a more straightforward structure. Yet, as the popcorn tax saga demonstrates, the reform has merely replaced one set of complications with another. Multiple tax slabs, inconsistent categorisations, and frequent reinterpretations have created a system that often feels neither “Good” nor “Simple.”
Data from FY24 underscores the stakes involved. GST collections amounted to 6.86% of India’s GDP, a modest improvement from 6.72% in FY23. While this is commendable, experts believe that a streamlined GST system could contribute an additional 1–2 percentage points to India’s GDP. Rationalising tax rates, reducing slabs, and addressing ambiguities in item classifications are critical steps toward achieving this.
Simplification of tax slabs can be a revenue growth strategy. As Benjamin Franklin famously noted, nothing is certain in life except death and taxes. But the Indian taxpayer can be forgiven for fearing “death by taxes.” The popcorn tax confusion is emblematic of a broader issue: the need for GST to evolve into a truly intuitive system.
A simplified structure not only increases taxpayer acceptance but also enhances economic compliance and revenue collection. The GST Council must urgently pivot its focus toward reducing the number of tax slabs and creating clearer distinctions based on consumption patterns.
Essential and semi-essential items should attract lower rates, while luxury goods can bear higher levies. Moreover, similar products should not be taxed differently — confusion between caramelised popcorn and salted namkeen is emblematic of a system still finding its footing. Also then what is luxury needs to be with perspective of current capitalist world we live in, and not with any other political -isms.
The GST system was envisioned as a hallmark of cooperative federalism and economic reform, a mechanism to simplify India’s complex tax web and empower its markets. Yet, operational inconsistencies like the popcorn tax debacle dilute its transformative potential.
The GST Council must remember that taxpayers are not adversaries but partners in nation-building. Constant recalibrations and over-complications erode trust, increase compliance burdens, and distract from the larger goal of fostering growth.
-- FPJ
