What Do GST And iPhone Have In Common? Sanjeev Sanyal Explains Indirect Tax With Analogy | Business News

Economist Sanjeev Sanyal

Is there any common link between iPhone and Goods and Services Tax (GST)? You may puzzle on this question, whirring your brain’s neurons to find the unlikely connections between two fundamentally different things – technology and the taxation system.

Economic advisor to Prime Minister Narendra Modi, Sanjeev Sanyal, has used the iPhone metaphor to explain the GST in a simple tone to GenZ, the popular word refers to the generation born roughly between 1997 and 2012. This extrapolation sets appropriate when the craze of iPhone in GenZ is unmatched by other generations.

While speaking at NDTV Profit GST Conclave, Sanyal said explained that a product has to go through a long journey with multiple value additions or inputs before turning into a final product. He said lots of inputs go into an iPhone and then you get the finished product. Instead of just taxing the iPhone at the final stage, there’s tax at every point where input addition happens.

Sanyal also explained why a total tax on the product is not put at the end. “If you load all the taxes to the total, at the end, you will end up having something called cascading,” Sanyal added. He said it causes too much overload on that system.

He said GST is a way to spread out tax burden evenly, without causing too much burden on the system. “GST is essentially a way of levelling out that entire supply chain with the pressure of the tax, so that nobody in the system is excessively pressured by the cost of the government taking money from the system,” Sanyal said at NDTV Profit GST Conclave.

In a sweeping reform, the GST Council, led by Finance Minister Nirmala Sitharaman, has approved a sharp overhaul of the Goods and Services Tax (GST) structure. Effective September 22, the system will be simplified into just two main slabs of 5% and 18%, replacing the current 12% and 28% rates, with a special 40% slab for luxury and sin goods. Billed as a “historic Diwali gift” for citizens and businesses, the reforms aim to lower the cost of living, boost consumption, and spur economic activity.

The Goods and Services Tax (GST), India’s biggest tax reform, was launched at midnight on July 1, 2017, in a historic joint session of Parliament by President Pranab Mukherjee and Prime Minister Narendra Modi. It replaced a complex web of indirect taxes such as excise duty, service tax, VAT, and entry tax with a unified system under the principle of “One Nation, One Tax, One Market.” The GST framework introduced a four-slab rate structure (5%, 12%, 18%, and 28%) along with CGST, SGST, and IGST to simplify taxation and reduce the cascading effect, marking a milestone in India’s economic reforms.