The 18% tax on popcorn introduced by the 55th GST Council has caused a lot of anger among netizens. Many people are upset about the higher tax on popcorn, especially caramel popcorn, which has added sugar. The GST Council has explained that the tax on caramel popcorn will be higher than regular namkeen because of its sugar content. People are sharing their thoughts on how this tax will affect common snacks.
New Delhi: The GST Council, during its 55th meeting chaired by Finance Minister Nirmala Sitharaman, announced important updates to the GST framework, including clarifications on the differing tax rates for salted and caramel popcorn.
Tax Rates Expalined:
- Salted Popcorn: Classified as a “ready-to-eat namkeen” when pre-packaged and labelled, salted popcorn is subject to a 12% GST. If sold unpackaged, the tax rate decreases to 5%. This aligns salted popcorn with other snack items across the country.
- Caramel Popcorn: In contrast, caramel popcorn is categorized as “sugar confectionery” under HS code 1704 90 90, attracting an 18% GST due to its sugar content. This higher rate reflects its status as a sweet treat rather than a standard snack.
To further clarify these distinctions, the Central Board of Indirect Taxes and Customs (CBIC) will release a circular outlining the current taxation rules for popcorn, helping both businesses and consumers understand GST compliance better.
Additionally, the council announced a reduction in the GST rate for fortified rice kernels to 5%, reinforcing its commitment to enhancing nutritional products. Items such as black pepper and raisins supplied directly by farmers will continue to be GST-exempt.
However, discussions on adjusting GST rates for insurance premiums and food delivery platforms like Swiggy and Zomato have been postponed for further consideration.
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The GST Council’s clarifications highlight its focus on simplifying the complexities of India’s tax system. By categorizing products based on their characteristics and ingredients, the council aims to ensure consistency in tax application, assisting businesses in compliance efforts.
In contrast, popcorn mixed with sugar (caramel popcorn) alters its essential character to that of sugar confectionery, classifying it under HS code 1704 90 90, which attracts an 18% GST according to the clarification.
In conclusion, the GST Council’s clarification on popcorn taxation is an important step in making the GST system more clear and transparent. While it may result in higher prices for flavored popcorn, the reason for this tax is to create a fairer and more consistent tax system for the food industry.