Indian GST Rate Changes Attract Little Notice

By Global Tax Weekly

Tax is something that most people merely grin and bear, albeit through gritted teeth. But it’s sometimes much more exciting than that. Indeed, it can change the course of history. Think the Boston Tea Party or Magna Carta. America might still be ruled by Britain, and Britain ruled by kings and queens, or portly prince-regents with more interest in pies than the parliamentary process. All (or largely) because of tax.

In many countries, 2018 ended in an inferno of tax-motivated protests. Not quite revolutions, but fervent enough to change a government’s mind. The “gilet jaunes” demonstrations in France was the most widely-reported example. But the movement has seemingly inspired similar tax-motivated outcries as far afield as Canada and Taiwan. The streets of Jordan’s capital, Amman, have also reverberated to the sounds of anti-tax protests recently.

Tax cuts, on the other hand, never, or very rarely, have the same impact, do they? As far as I’m aware, an income tax cut has never brought people out onto the streets for a spontaneous carnival. We’re certainly not seeing this in India, despite the fact that several sectors of the economy will face substantially reduced rates of goods and services tax.

Last month, the GST Council announced a cut in the rate of GST on cork (roughly squared or debagged, no less), agglomerated cork, and articles of natural cork, from 18 percent to 12 percent. But where are the cork sellers? Furthermore, the GST Council has decreed that pulleys, transmission shafts and cranks, gear boxes will be newly subject to the 18 percent rate of GST instead of the top rate of 28 percent. That’s a 10 percent tax cut. Yet, nobody seems to be cranking up the party music as a result. Suppliers of music books – which are being zero-rated – haven’t played a note in celebration.

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