The Goods and Services Tax (GST) Council has clarified the differing tax rates applied to salted versus caramel popcorn, a decision that has stirred considerable debate and discussion. The council has stated that there is no change in the existing tax rate. Pre-packaged, labeled, ready-to-eat snacks, including those mixed with salt and spices and having the characteristics of "namkeens," are subject to a 12% GST. However, caramel popcorn, due to its sugar content, is classified as sugar confectionery and attracts an 18% GST.
The GST Council, in its 55th meeting, addressed the seeming disparity, with Finance Minister Nirmala Sitharaman clarifying the rationale behind the different rates. According to Sitharaman, the differentiation arises because caramel popcorn contains added sugar, thus altering its fundamental nature from a "namkeen" to a sugar-based confection. This classification places it under a different Harmonized System (HS) code (1704 90 90), which mandates the higher 18% GST rate.
Conversely, unpackaged and unlabeled popcorn that is mixed with salt and spices attracts a 5% GST. If it's pre-packaged and labeled, the tax rate increases to 12%. The distinction is based on whether the popcorn is sold loose or in packaged form.
The decision by the GST Council to levy different tax rates on popcorn varieties has elicited mixed reactions, with some questioning the logic behind the differentiation. Some social media users have responded with humor and sarcasm, with some joking about potential tax distinctions based on how drinking water is consumed. Others have drawn attention to what they perceive as inconsistencies in GST rates across different product categories.
Despite the reactions, the GST Council has maintained that the decision is based on established principles of tax law, where products with added sugar are treated differently from savory snacks. The Central Board of Indirect Taxes and Customs (CBIC) is expected to issue a circular to further clarify the existing taxation rules for popcorn varieties.
