Why does caramel popcorn attract a different GST rate from salted popcorn? Explained

Popcorn GST: The goods and services tax (GST) Council Meeting, headed by Finance Minister Nirmala Sitharaman, agreed to issue a clarification on the taxation of popcorn, saying that pre-packed and labelled ready-to-eat snacks will attract a 12 per cent tax while an 18 per cent GST rate will be levied if it is caramelised.

The tax rate on popcorn has not changed, and the GST Council agreed that the Central Board of Indirect Taxes and Customs (CBIC) would issue a circular clarifying the current taxation rate regime on popcorn varieties.

Also Read: From Popcorn to rice kernels—Here’s what gets cheaper & dearer after 55th GST Council Meeting decisions

Why caramel popcorn attracts 18% GST?

"Ready-to-eat popcorn", which is mixed with salt and spices and has the essential character of namkeens, currently attracts a five per cent GST if it is not pre-packaged and labelled. If it is supplied as pre-packaged and labelled, a 12 per cent GST is levied.

However, when popcorn is mixed with sugar (caramel popcorn), its essential character changes to that of sugar confectionery. As per the clarification, it would be classifiable under HS 1704 90 90 and attract an 18 per cent GST.

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While addressing the media on the outcomes of the 55th GST Council Meeting meeting, the finance minister clarified, “Salted, caramelised, plain popcorn is being sold as namkeen in certain states. Caramelised popcorn comes with added sugar, so the treatment of rate is different from namkeen.”
 

GST Council Meeting Decisions Today

The GST Council, in its 55th meeting conducted in Jaisalmer, Rajasthan, on Saturday, deferred the much-awaited decisions on reducing the tax rate on life and health insurance premiums and levying tax on food delivery by app-based platforms such as Swiggy, Zepto, and Zomato.

The tax panel decided to levy an 18 per cent GST on the margin value of used electric vehicles (EVs) sold by businesses and old vehicles. GST will be exempt on the sale of used EVs or cars between two individuals. 

Also Read: Butter chicken at 28% GST? Ingredient-based popcorn tax sparks ire, analyst says ‘next will be restaurant food menu’

The GST Council cut the tax rate on fortified rice kernels used for public distribution to five per cent from 18 per cent. It exempted gene therapy from the ambit of GST. The exemption of IGST on surface-to-air missiles was also extended.