Is GST disrupting the recipe for India's growth?

The rise of the Indian economy lies in the ease of regulations. What should be a simple structure for Goods and Services Tax (GST) becomes complicated when multiple categories of taxes become applicable on the SAME product.

Within the food sector, the GST rates in India vary depending upon the product, its packaging, processing levels, branding, and sometimes even the temperature levels the food product is kept under. Such complexities in turn enable interpretations from various stakeholders within the industry and complicate the very idea of a simple, unified tax structure throughout the country.

Sharing some examples below—

• Frozen Roti has a 12% applicable GST in India, while Frozen Paratha has an 18% applicable GST.
• Popcorn has 5% GST taxes if sold unpacked, 12% GST if sold packed, and 18% GST if caramelized.
• Fresh Milk attracts 0% GST, but when processed to extend shelf life (UHT), it attracts 5% GST; when processed and sold as flavored milk, it has a 12% GST rate, and when processed and sold as ice cream, it attracts an 18% GST rate.
• Food served in a restaurant, which is made in the same kitchen, has 5% applicable GST if served in a non-AC room and 18% applicable GST if served in an air-conditioned room.
• Traditional snacks have 0% GST if sold loose, while they are taxed at 12% to 18% depending upon ingredients and branding.

Such differentiations, in fact, lead to encouraging consumers to buy open and unpacked food products versus packed and safe food products. Importantly, if "ease of doing?business" in India is the goal, then such complexities within a simple tax structure should be avoided.

India has worked hard to liberalise and ensure that regulations do not hamper its growth. India, therefore, looks forward to its leadership to ensure that bureaucracy, which sometimes derives its power from complicating simple issues, is reminded to keep things simple, which would surely lead to ease of doing business.