GST vs. Income Tax: The Reform India Missed
When the Goods and Services Tax (GST) was rolled out, it was hailed as India’s most ambitious tax reform—one nation, one tax, one market. Over time, the GST Council has spent countless hours framing next-generation reforms: rate rationalisation, compliance tweaks, e-invoicing, and faceless scrutiny. Each step is aimed at plugging loopholes and widening the tax net. But amid this relentless tinkering, a larger question has gone unasked: why do we still carry the burden of dual taxation—GST and income tax—on the same economic activity? The Tax Chain in Action Take a simple supply chain. A manufacturer produces a product for ₹5 (all costs included) and sells it to a stockist for ₹7. The stockist sells it to a retailer for ₹9. The retailer sells it to the consumer for ₹11. Each makes a profit of ₹2. The combined profit in the chain is ₹6. At 30% income tax, the government would collect ₹1.80—provided every transaction is disclosed. If one player hides the deal or shifts to cash, the govern...