Is Tax Binging On Your Earnings?

Will the FM be able to POP the CORNy tax system in the budget? These words were coined after the hullabaloo around GST on popcorn. However, this is also the state of the tax system today: not considering popcorn to be popcorn. It treats it as a staple (unpackaged food item), or namkeen (packaged) or sugary (caramelised) item to levy different tax rates.

For normal mortals — popcorn is popcorn. Fitment seems like an excuse when the difference is 5 per cent to 18 per cent. Then why would Babus think that every form of popcorn deserves a different rate with so much rate difference? One of the reasons I can think is to keep the law packed in complexity so that when it is unpacked there are high chances of litigation and collection of tax on appeal. For Babudom, litigation is akin to caramelising (pun intended), it keeps their importance intact and keeps their tax targets. Let me present another perspective to litigation as a borrowing technique.

Let us ask whether tax ligation is a borrowing technique. If one sees parts of tax collection from litigation as borrowing, you will understand that government interest to lower litigation is about 4.2 per cent (pun intended). How? Firstly, the Union Budget doesn’t factor pending litigation amounts as contingent liabilities or provisions.