GST adds a 'Caramel Crunch' to tax confusion!

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Market Watch

• After last week's steepest declines in over two years, India's benchmark indices rebounded—Sensex rose 498.58 points to 78,540.17, and the Nifty gained 165.95 points to close at 23,753.45.
• Realty, banking, and metal sectors led gains, while small-cap stocks dipped 0.6%, and the media index fell 0.4%. Midcap was up while the smallcap index was down 0.6%.

Of note: The NSE and BSE will conduct full trading sessions on Budget Day i.e. February 1, despite it being a Saturday, typically a non-trading day.

ICYMI

🧬'There are only two genders': President-Elect Donald Trump pledged to stop transgender lunacy on taking office.

🔥Guatemalan migrant set a sleeping woman on fire on the NYC subway in a shocking incident.

📢Bangladesh formally requests India to hand over former PM Sheikh Hasina to face trial.

📺Netflix subscribers are curious whether the addition of WWE Raw will lead to pricing changes or immediate streaming access.

🙅♀️Ex-IAS trainee Puja Khedkar was denied pre-arrest bail over allegations of intending to cheat the UPSC.

🫨Donald Trump has threatened to demand the return of the Panama Canal.

🏏Pakistan has reportedly chosen the UAE as a neutral venue for India's Champions Trophy matches, bypassing direct confrontations on home soil.

GST adds a 'Caramel Crunch' to tax confusion!

The 55th Goods and Services Tax (GST) Council meeting brought notable changes affecting the cost of several goods and services. The council’s decision to tax different flavours of popcorn at different rates drew maximum criticism. People called out the excessive bureaucracy behind the move.

Facts: The GST rate on the sale of old and used cars, including electric vehicles, has increased from 12% to 18%.

• Popcorn mixed with salt and spices attracts 5% GST when unpackaged and 12% when pre-packaged.
• Caramel popcorn, being sugar-coated, is classified as confectionery and attracts 18% GST.

Meanwhile, the GST Council postponed a decision on reducing tax rates for life and health insurance premiums.

• The Group of Ministers had proposed exempting term life insurance premiums from GST. Exemptions for senior citizens and policies under Rs 5 lakh were also considered, but further discussions are needed.

Why people love to hate the GST: It was introduced in 2017 with the intent to simplify taxes, however, the current approach to GST highlights inefficiencies in governance and decision-making.

• For instance, the popcorn GST issue—estimated to contribute just 0.013% of total revenue in 2025—underscores a misplaced focus on minor revenue gains at the cost of citizen convenience.

• Instead of focusing on simplifying compliance, streamlining tax slabs, and ensuring uniformity across categories, energy is expended on decisions with negligible financial impact.
• The lack of an autonomous body, such as the Finance Commission or Monetary Policy Committee, to oversee GST rates further compounds the problem.
• Centralized control hampers efficiency, as key decisions should involve a collective and data-driven approach, engaging state finance ministers, bureaucrats, and industry leaders to prioritize ease of compliance and economic growth over micromanagement.

It’s not all bad: In June 2024, Central Board of Indirect Taxes and Customs data showed that tax has been reduced on several products and services used by the common people.

Tweet du jour

What’s happening | PM Modi awarded with the highest civilian honour in Kuwait

PM Modi was awarded 'The Order of Mubarak Al-Kabeer', Kuwait's highest honour, recognizing his efforts in strengthening bilateral ties. In a rare diplomatic gesture, Kuwait's Prime Minister personally bid farewell to PM Modi at the airport.

Hi, I’m Sai Deepthi, the editor of this newsletter. I’d love to hear some feedback on the newsletter. WhatsApp me directly and tell me what you think.