Geared too finely | Mint

New Delhi: A decision of the Goods and Service Tax Council on tribunals to resolve disputes over a tax billed five years ago as “good and simple” will have to wait, but, among other calls taken, Saturday’s meeting did deliver a measure of clarity on the uniformity with which road traffic will be shaped by kaleidoscopic taxation in India. Cars that are popularly known as “sport utility vehicles” (SUVs) with combustion engines larger than 1,500cc, which are longer than 4,000mm and also offer ground clearance of 170mm or above will be defined as SUVs across the country, and must therefore pay GST at a rate of 28% and also a 22% cess. Classified thus, their on-road prices will be high enough to impact market demand, as Indian tax slotting has long done. A panel is expected to review whether the last three points of that checklist should apply to utility vehicles which are not retailed as SUVs. That such confusion over classification should arise at all speaks of how a major reform of indirect taxation, aimed partly at reducing state intervention, got implemented with sufficient variation to echo our command economy of the pre-1991 vintage. Thankfully, it still isn’t too late to simplify GST.