An Evaluation of India's GST Reform as Potential "Elegant Rent Extraction"

An Evaluation of India's GST Reform as Potential "Elegant Rent Extraction"AbstractThis analysis evaluates the critique, notably articulated by former Chief Economic Adviser Arvind Subramanian, that India's Goods and Services Tax (GST) system, despite its intended goal of simplification, has evolved into a complex mechanism susceptible to what is termed "elegant rent extraction." The study explores the core arguments: the proliferation of effective tax rates far beyond the advertised slabs, persistent structural flaws such as duty inversion and arbitrary classification, the systemic failure of consumer protection mechanisms like the National Anti-Profiteering Authority (NAA), and a growing democratic deficit within the GST Council's governance. Through a qualitative analysis of expert opinions, policy documents, and media reports, this paper finds credible evidence supporting the critique. The complex architecture, combined with bureaucratic discretion and weak accountability, creates conditions where the benefits of tax reforms may accrue to businesses and intermediaries rather than the end consumer. The paper concludes that without fundamental reforms focused on transparency, simplification, and democratic accountability, the GST system risks becoming a sophisticated means of rent-seeking, undermining its foundational promise as a "Good and Simple Tax."