The Cost of GST on Parle-G Biscuits: A Perspective

The recent controversy over the implementation of 18% Goods and Services Tax (GST) on Parle-G biscuits has sparked debates within the consumer and business communities. The question of whether this tax rate should be 0 or 5 arises particularly because of the consumption patterns associated with this widely consumed snack. This article delves into the implications of the GST on Parle-G biscuits and provides a balanced perspective on this matter.

The Argument for 18% GST

The primary argument in favor of levying 18% GST on Parle-G biscuits is based on the broader economic context. Parle-G, being a processed food product, is subject to the same tax rates as other biscuit manufacturers. The GST is designed to be a neutral tax that affects all goods and services equally, ensuring that the incidence of taxation is evenly distributed across different sectors and commodities. Therefore, an 18% GST on Parle-G ensures that the tax burden is consistent with the average rate applied to similar products in the market.

Implications for Consumers and Manufacturers

One of the main concerns is the impact on low-income consumers who may disproportionately bear the cost of the 18% GST. The argument that Parle-G biscuits should be taxed at 0% or 5% because they are primarily consumed by the poor or given to street animals does not hold up under scrutiny. While it is true that some low-income households may regularly purchase Parle-G biscuits, taxing it at a lower rate would imply a discriminatory policy that benefits a small segment of the population at the expense of others.

Points to Consider

First, the GST is intended to be a broad-based tax that applies uniformly across the board. This helps in creating a more equitable tax system where the tax burden is distributed evenly. Lowering the tax rate on Parle-G biscuits would not only benefit the poor but would also attract those in higher income brackets to purchase more of these snacks. This could lead to a skewed revenue distribution.

Historical Context: Blaming GST for Sectoral Crises

A similar trend of blaming GST for crises affecting specific sectors has been observed in other industries. For instance, the auto sector faced similar challenges when it was hit by economic downturns. However, rather than addressing the fundamental issues that led to these crises, policymakers and industry leaders often point the finger at GST as the culprit. This reflexive response does not address the root causes and instead diverts attention from finding genuine solutions.

Conclusion

In conclusion, the implementation of 18% GST on Parle-G biscuits reflects the broader principles of the GST system. While the tax rate on consumer goods may need to be reconsidered in specific contexts, the blanket approach of imposing a 0% or 5% rate without a broader policy reform is impractical. The GST remains a critical tool in ensuring a fair and transparent tax regime that benefits all stakeholders in the long run.