Popcorn will be dearer now. Movie buffs will feel a pinch in their pockets wanting to enjoy a theatrical release as popcorn has been slapped with 18 per cent GST. Ready-to-eat popcorn, that is mixed with spices and salt will have a 12 percent tax while the sweet and crunchy caramel popcorn will be six percent higher – 18 percent GST.
“Finance Minister Nirmala Sitharaman says it’s all to do with sugar.”
She told the 55th GST Council on December 21 that caramelized popcorn contains added sugar; it will have to bear a heavier price than salty snacks (namkeen). The minister highlighted that juices with added sugar like carbonated drinks attract a different tax rate altogether.
What that means is that plain popcorn (without the added spices, salt or sugar) has no extra costs involved. So, if consumers want a little spice or sugar, they have to be ready to pay for it. Caramel popcorn is categorized as ‘sugar confectionary’ under HS code 1704 90 90 and comes with 18 percent GST. This sweetened popcorn is more of a sweet treat like a fudge or than a traditional namkeen snack.
“Earlier, the custom of popcorn in India was limited to metros only, post 2000, as the ‘mall n multiplex’ culture took over in several parts of the country, the popcorn business had a brick growth. This was the time when popcorn culture took the shape of an industry.”
Now the government has put the same popcorn under the ambit of GST. It is worthwhile to mention that till now service tax was levied on popcorn in multiplexes, but now GST will be levied as well. So one has to shell out two taxes for the same popcorn you love in the cinema halls.
“Sitharaman explained that popcorn mixed with sugar has changed its character to that of a sugar confectionary. “Till the time popcorn is salted, it attracts five percent GST, but when it has added caramelized sugar, it is no longer namkeen.” As such, caramelized popcorn’s price is different.”
However, this drew strong rebuke from the opposition party – Congress. Jairam Ramesh, Congress general secretary of the party’s communications, said GST evasion is significant. He said input tax credit fraud is common and the number of bogus companies set up to ‘game’ the GST system runs into thousands.
Not only political figures. Even leaders of the business industry have condemned this move. How can pop corn be classified into three different categories and subsequently taxed atrociously? They ask in a unified voice.
Ramesh tweeted that the absurdity of three different tax slabs for popcorn under GST only brings to light a deeper issue – the growing complexity of a system that was supposed to be a Good and Simple Tax. He believes the tracking of supply chain is weak, registration process is flawed and advantages are being taken of loopholes in turnover exemptions. The Congress spokesperson added that compliance requirements are cumbersome and misclassification of goods is frequent.
Alok Jain, the founder of Weekend Investing, described the taxation of popcorn as mindless, unnecessary regulation without any rhyme or reason. He said it undermines the ease of doing business. Popcorn is one of the things which is extensively consumed especially by the children. Such heavy taxation on such things would limit the use of Maize.
