It is hard to find fault with the Goods and Services Tax (GST) Council finalising a multi-slab rate structure for the new indirect tax, commensurate with the principle to tax the haves more and the have-nots less.
The four-tier GST structure of five per cent, 12 per cent, 18 per cent and 28 per cent is so graded that it won’t upset anybody’s consumption potential. The exemption of half the items in the Consumer Price Index basket under the new tax regime does not entail an additional tax burden for the poor.
The decision to not levy tax on essential commodities or products or keep it at the lowest rate of five per cent would shield the common man from price rise. The middle classes have reason to welcome the new structure as the tax on soaps, detergents, oil, shaving kits, small cars and other products of their use is fixed at 18 per cent. The rich can afford to pay 28 per cent tax for ultra-luxury goods. The multi-layered GST distinguishes between “necessities” and “luxuries” and reflects India’s deep class divisions.
However, the GST’s roll-out would not necessarily improve the lives of the poor. For instance, even though food grains and basic medicines have been kept out of the GST ambit, it will not tackle the problems of malnutrition and ill health. For tangible transformation, radical changes in economic policies are a must.
G David Milton Maruthancode
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