"Unpacking the Popcorn Debate: Why Salted and Caramel Treats Face Different GST Rates"

The council announced that pre-packaged, labeled ready-to-eat snacks will incur a 12% tax, whereas caramelized popcorn will attract an 18% GST, impacting pricing and consumer choices in the snack market.

P24 News Media

December 22, 2024

1 minute

"Unpacking the Popcorn Debate: Why Salted and Caramel Treats Face Different GST Rates"

India

The Goods and Services Tax (GST) Council convened on Saturday to provide an update regarding the tax obligations relating to popcorn, confirming that there would be no alterations to the current tax rates, as reported by the news agency PTI.

During the 55th session of the GST Council, Union Finance Minister Nirmala Sitharaman elaborated on the subject, indicating that pre-packaged and labeled ready-to-eat snacks would incur a tax rate of 12 percent, while caramelized popcorn would fall under an 18 percent GST category. She noted that various types of popcorn, such as salted and caramelized, are marketed as namkeen in specific regions, and the inclusion of sugar in caramelized popcorn necessitates a different tax assessment compared to regular namkeen products.

The council also assured that the Central Board of Indirect Taxes and Customs (CBIC) would circulate a clarification to elucidate the prevailing tax regulations concerning popcorn to avoid any misunderstandings.

Furthermore, "ready-to-eat popcorn," which is typically blended with salt and spices resembling the characteristics of namkeen, currently attracts a GST rate of 5 percent if sold unpackaged. However, should it be pre-packaged and labeled, the tax rate escalates to 12 percent. This distinction emphasizes the importance of packaging in determining applicable tax rates.

In regards to caramelized popcorn, the council specified that when this snack is infused with sugar, it qualifies as sugar confectionery according to the Harmonized System code 1704 90 90, thereby subjecting it to the higher GST rate of 18 percent. This classification highlights the varying tax implications based on the ingredients and preparation methods of popcorn products.

In addition to popcorn taxation, the council took significant action by reducing the GST rate on fortified rice kernels to 5 percent. Also noteworthy was the decision to exempt black pepper and raisins, when procured directly from farmers, from GST obligations, reflecting a focus on supporting agricultural products.

Finance Minister Nirmala Sitharaman shared that several important decisions were postponed during this meeting, specifically regarding potential reductions on rates for insurance premiums. Moreover, deliberations concerning whether GST should be applied to food delivery services like Swiggy and Zomato remain unresolved, indicating that more discussions are necessary to reach a conclusion on this matter.

This council meeting underscores the government's ongoing efforts to clarify and refine tax regulations, ensuring that the taxation framework remains effective while considering the diverse nature of food products. As these discussions progress, businesses and consumers alike will benefit from a clearer understanding of the applicable tax obligations and classifications.

As the GST Council continues to address various fiscal matters, stakeholders are encouraged to stay informed about any updates, which will be vital for compliance and planning. The decisions taken will have implications for both consumers and the food industry, thus warranting close attention from all parties involved.