New Delhi:

Popcorn, in loose form, sold in movie theatres will continue to attract GST at a 5 per cent rate, same as in restaurants, government sources said.

However, if the popcorn is clubbed and sold together with a movie ticket, the supply would be treated as a composite supply and taxed as per the applicable rate of the principal supply, which is the ticket.

The 55th meeting of the GST Council clarified the GST applicability in popcorn after it received a request from Uttar Pradesh to clarify the classification and GST rate applicable to popcorn mixed with salt and spices.

There has been no increase in the GST rate on popcorn.

Popcorn is served to customers in theatres in loose form and hence will continue to attract a rate of 5 per cent as applicable to ‘restaurant service’ as long as supplied independently of the cinema exhibition service, according to the sources.

Under GST, popcorn mixed with salt and spices is classified as namkeen and attracts a 5 per cent tax. When it is pre-packed and labelled, the rate is 12 per cent.

All sugar confectionary, other than a few specified items, attract 18 per cent GST, and hence, caramelised popcorn attracts an 18 per cent rate.

The council recommended the issuance of clarification to facilitate the resolution of classification disputes in the field on ready-to-eat popcorn that is mixed with salt and spices, the government sources noted.

All goods, including food items, are classified under GST as per the Harmonised System (HS) classification, which is a multipurpose international goods nomenclature developed by the World Customs Organisation (WCO).

This system is used by over 200 countries, covering over 98 per cent of the international trade. The varying GST rates are only consequential to the classification of the commodity under different chapters of the HS system.

(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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The Congress on Sunday (December 22, 2024) 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,” Mr. 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 lakh crore 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.

GST Council on Saturday agreed to issue a clarification on taxation of popcorn, saying that pre-packed and labelled ready-to-eat snacks will attract a 12% tax while an 18% GST will be levied if it is caramelised.

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 currently attracts a 5% GST if it is not pre-packaged and labelled.

If it is supplied as pre-packaged and labelled, a 12% 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% GST, as per the clarification.