GSTs Tax bands : Good or Bad?
This debate between @BwoyBlunder and @DeepakShenoy on Twitter prompted me to jot down this short note on the efficacy of GST and whether multiple bands of tax rates violate the principles of a nationwide goods and services tax. The proposed GST regulations envisaged a four tier rate of taxation · Merit rate for essential goods and services · Standard rate for goods and services · Special rate for precious metals · NIL rate · But as it appears from the GST council meetings that ended on the 19th of October, we may have instead a five tier rate as follows: · Merit rate at 6% · FMCG products and non-essential food items etc. 12% · Standard rate for goods and services 18% · Luxury goods 26% · Nil rate In essence the GST is based on the one nation one tax rate principle, does that mean there should only be one singular rate across different categories of goods and service