GST impact: Cheaper to eat sweets at shop counter than seated at table..

Yesterday posted that under GST, simple barfi gets taxed at 5% whereas chocolate ones at 28%.

In another article, we learn that better to eat sweets standing at the counter on a sweet shop rather than sit there:

What is the difference between having a rasmalai standing at the counter of your favourite sweet shop, and ordering it at a table a few steps away? Well, apart from comfort, it’s the GST rate. If you have the sweet at the counter and walk out after paying the bill, many mithaiwalas will charge 5% GST. But if you decide to enjoy it after asking a waiter to get it, the shop may ask you to pay 18%, if it’s air-conditioned. It is the same for dhokla, the favourite Gujarati snack.

If you order at the counter you pay at a rate of 12% GST, but if you prefer to sit down to enjoy the snack you pay a higher rate of 18%.

There are others who are interpreting it differently. For instance, a leading sweet shop in central Delhi, which does not have seating facility but has tables where you can enjoy a snack or a sweet, is charging 5%.

“The higher levy is applicable if you have a large seating area, which we do not have,” explained the owner, who did not wish to be identified.

But the differential tax rate is something that most consumers are unaware of, resulting in many of them getting a surprise when they are presented the bill.

Tax experts say subtle interpretations of GST need to be effectively communicated to consumers. The significant difference in GST rates for the same product may prompt a large number of consumers to have their favourite sweet or snack at the counter or outside the shop, rather than enjoy it at leisure sitting at a table.

GST like demonetisation provides fascinating cases on impact of economic policy on spending behavior…

6 Responses to “GST impact: Cheaper to eat sweets at shop counter than seated at table..”

  1. vikramml Says:

    You have a very high tolerance for government policy garbage. I don’t understand how, why…

    I would worry about this, but every month I worry about import duties instead so I don’t have any residual bandwidth to worry about GST garbage.

    For example: this stupid watch that I want is $70 = Rs. 4500 in the US and Rs 12,200 in India.

    I could actually understand if the govt directed the import duty on this item towards a manufacturing policy which promoted manufacturing of these types of products within India, but that isn’t what they do, so why do I have to pay this import duty? And, this has been going on for decades. Why do people put up with this? I don’t understand.

    And, then 73% of Indians have faith in the government. It is beyond bizarre.

  2. Amol Agrawal Says:

    Hi Vikram. As always the question is Vikram ko itna gussa kyun aata hai? I am not tolerant towards government policy. Just avoid using language as dont want unnecessary attention. All this GST stuff is pretty interesting and frustrating for an economics student.

  3. vikramml Says:

    By tolerance I mean patience to analyze or to label something like this as “fascinating”. Why even look into the details of something so bizarre, and how in the world is it fascinating?! It is among the most non-fascinating things ever. And, if I was an economist I would be even more annoyed on having to spend time on something like this. maybe even taking out rallies. Where are the JNU jholawalas when you need them?

    As always, my question is baki logon ko gussa kyon nahin aata hai 🙂

  4. Amol Agrawal Says:

    I called it fascinating not for the policy but how human behavior responds to all these government interventions. Most of the time we see how wisdom residing in several of us wins over these government policy changes. GST is bizarre with no clarity on how these tax rates are determined. But this is how things are in this country..Gussa aata hai, but kuch kar nahin paate…:-(

  5. vikramml Says:

    Yeah.. I guess so. But, even that is well studied. Anyway, I like the Ajay Shah way of handling things. He promptly publishes a paper establishing why a govt policy stance is stupid and then he goes to town with it. I’m hoping you might know him – I don’t know of any other econ blogs in India.

  6. Amol Agrawal Says:

    Apologies for the late reply. Of course am aware of Ajay Shah’s blog and have been reading it for a long time now. I agree he does quite a job of calling a spade a spade.

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