- Monday, December 23, 2024
The GST Council has clarified that when popcorn is mixed with sugar (caramel popcorn), its character changes to that of a sugar confectionary, and will attract a higher 18 per cent tax
By: Shajil Kumar
POPULAR cinema hall snack popcorn and its varied flavours have attracted the attention of taxmen and the different layers of taxation advocated by the goods and services tax (GST) Council during its meeting in Jaisalmer has stirred a meme-fest on social media.
The Council on its concluding day on Saturday clarified that pre-packed and labelled ready-to-eat snacks will attract a 12 per cent tax, while an 18 per cent GST will be levied if it is caramelised.
It added that there is no change in the tax rate of popcorn and the GST Council has only agreed that the Central Board of Indirect Taxes and Customs (CBIC) will issue a circular clarifying the current taxation regime of popcorn.
“Ready-to-eat popcorn”, which is mixed with salt and spices, and has the essential character of namkeens (salty snacks) currently attracts a 5 per cent GST if it is not pre-packaged and labelled.
If it is supplied as pre-packaged and labelled, a 12 per cent GST is levied.
However, when popcorn is mixed with sugar (caramel popcorn), its essential character changes to that of a sugar confectionary, and would therefore be classifiable under HS 1704 90 90 and attract an 18 per cent GST, as per the clarification.
Congress slams move
The Congress party said the “absurdity” of three different tax slabs for popcorn under GST only brings to light the growing complexity of the system and asked whether the Modi government will show the courage to launch a complete overhaul for instituting a GST 2.0.
Congress general secretary in-charge communications Jairam Ramesh also claimed GST evasion is significant, input tax credit fraud is common, and the number of bogus companies set up to “game” the GST system runs into thousands.
“The absurdity of three different tax slabs for popcorn under GST, which has unleashed a tsunami of memes on social media, only brings to light a deeper issue: the growing complexity of a system that was supposed to be a Good and Simple Tax,” he said in a post on X.
“GST evasion is significant, input tax credit fraud is common, and the number of bogus companies set up to ‘game’ the GST system runs into thousands.
“Tracking of supply chains is weak, the registration process is flawed, advantages are being taken of loopholes in turnover exemptions, compliance requirements are still cumbersome, and misclassification of goods is frequent,” Ramesh said.
He said the recent data on tax frauds uncovered by the Directorate General of GST Intelligence (DGGI) reveal GST evasion of ₹2.01 trillion ((£18.80bn) in FY24.
“With the Union Budget now just 40 days away, will the PM and FM summon the courage to launch a complete overhaul and institute a GST 2.0?” Ramesh asked.
Former adviser’s concern
Former chief economic adviser to the Narendra Modi government Arvind Subramanian raised sharp concerns over the way the GST framework is unfolding.
Terming it a “national tragedy,” Subramanian accused policymakers of moving away from the foundational principles of simplifying taxation.
Taking to X, Subramanian wrote, “This is a national tragedy, violating the spirit of the Good & Simple Tax the GST was meant to be. The folly is compounded because instead of at least moving in the direction of simplicity, we are veering to greater complexity, difficulty of enforcement & just irrationality. Sad.”
Subramanian was the chief economic adviser during Narendra Modi’s first term from October 2014 to June 2018.
Many X users wondered whether they would have to carry calculators while buying popcorn.
Many others lamented that GST Council luminaries have time to decide on rates for different popcorn variants, they have put in the backburner pressing issues like high GST rates on medical insurance premiums.
Some X users observed that a government that is unable to implement a single tax on popcorn is talking of ‘One Nation One Election’.
