The Finance Ministry in its 55th Meeting of the GST Council, clarified that ready to eat popcorn which is mixed with salt and spices are classifiable under HS 2106 90 99 and attracts 5% GST if supplied as other than pre-packaged and labelled and 12% GST if supplied as pre-packaged and labelled.However, when popcorn is mixed with sugar thereby changing its character to sugar confectionary...
The Finance Ministry in its 55th Meeting of the GST Council, clarified that ready to eat popcorn which is mixed with salt and spices are classifiable under HS 2106 90 99 and attracts 5% GST if supplied as other than pre-packaged and labelled and 12% GST if supplied as pre-packaged and labelled.
However, when popcorn is mixed with sugar thereby changing its character to sugar confectionary (e.g. caramel popcorn), it would be classifiable under HS 1704 90 90 and attract 18% GST.
By this recommendation, the government decided to regularize the issues for the past on “as is where is” basis.
The Council also clarified that there will be no new imposition of any tax in this regard and is merely a clarification as certain field units were demanding different tax rates on the same.
However, this decision has led to significant online debate, with many criticizing the complexity and perceived arbitrariness of these tax distinctions. Critics argue that these rates deviate from GST's original aim of simplifying taxation, potentially increasing litigation, and administrative burdens for businesses.
The comments were made when the GST Council's announcement on Dec 21, 2024 regarding different tax rates on popcorn added to the confusion of exhibitors, as the GST Council said that ready-to-eat popcorn which is pre-packed and labelled mixed with salt & spices will attract 12% tax while caramelized popcorn will attract 18% tax.
While top multiplex chains have clarified no change in tax slabs for any popcorn, including caramel, sold in cinemas, single screen exhibitor said that caramel popcorn sold in theatres will attract 18% GST as against the earlier 5%. Meanwhile, netizens reacted that such varying rates on different types of popcorn are due to the Harmonized System (HS) classification, which is a multipurpose international goods nomenclature developed by the World Customs Organization.
As per the HS classification, sugar confectionary falls under HS 1704 in Chapter 17. All sugar confectionary, other than few specified items, attract 18%. Namkeens are classified under HS 2106 90 99, and attract 5% GST when sold in other than pre-packaged and labelled form and 12% GST when sold in pre-packaged and labelled form.
Therefore, to pacify the outrage in the social media over 18% GST on caramelized popcorn, the government sources clarified that popcorn served in theatres will continue to be charged at 5%. It was explained that popcorn is served to customers in theatres in loose form and hence will continue to attract a rate of 5%, as applicable to 'restaurant service' as long as supplied independent of the cinema exhibition service.