Is the Popcorn Tax Fair? GST Rates from 5% to 18% Spark Debate Among Consumers

New Delhi: The government’s move to apply different GST rates to popcorn depending on its sugar or spice content has sparked a nationwide controversy. The Goods and Services Tax (GST) Council, led by the finance minister and comprising representatives from the states, announced a three-tier tax system for popcorn during its latest meeting.

The new rates, effective immediately, classify popcorn into the following categories:

• Non-branded salted popcorn: 5% GST

• Pre-packaged and labeled popcorn: 12% GST

• Caramel popcorn (considered sugar confectionery): 18% GST

This decision has been justified by Finance Minister Nirmala Sitharaman, who explained that products containing added sugar are taxed under a separate classification. However, the move has sparked criticism, confusion, and humor on social media, with many questioning the logic behind the distinctions.

Opposition and Economists Call Out GST Complexity:

Former Chief Economic Adviser K.V. Subramanian voiced his concerns on social media, labeling the decision “a bureaucrat’s delight and a citizen’s nightmare.” He argued that the marginal revenue generated from this differentiation does not justify the inconvenience caused to taxpayers.

Arvind Subramanian, another former Chief Economic Adviser, echoed these concerns, stating, “Instead of simplifying the system, this move adds layers of complexity, making enforcement more challenging and the framework irrational.”

Congress leader Jairam Ramesh criticized the three different tax slabs as a reflection of the growing complexity of a system initially marketed as a “Good and Simple Tax.” He advocated for a comprehensive reform of the GST system, suggesting a streamlined version labeled “GST 2.0.”

Ramesh also referenced data from the Directorate General of GST Intelligence, which revealed GST evasion amounting to ₹2.01 lakh crore in FY24. He highlighted flaws in the supply chain tracking, registration process, and compliance requirements as key issues undermining the system.

Memes, Mockery, and Misunderstanding:

Social media platforms have been flooded with memes and sarcastic posts targeting the government’s popcorn tax policy. One viral post questioned how a branded "salt caramel" popcorn packet would be taxed, humorously suggesting it might send tax officials into a dilemma.

The Kerala Congress unit added to the satire, asking if sweet dishes like "Sweet Pongal" would soon face similar tax hikes. Their statement mocked Sitharaman’s explanation, labeling it a “futile attempt” to justify an increasingly convoluted GST framework.

Recurring GST Classification Controversies:

This is not the first time GST classifications have sparked outrage. The system has previously faced criticism for:

• Differentiating chapatis from layered flatbreads.

• Applying different tax rates to curd and yogurt.

• Taxing cream buns differently from buns and cream served separately.

Critics argue that such distinctions only add unnecessary layers of complexity, causing confusion for both businesses and consumers.

Government Defends the Move:

Gopal Krishna Agarwal, the BJP’s spokesperson on economic affairs, defended the GST Council’s clarification. He stated that varying GST rates for similar base ingredients are standard practice, depending on the final product classification. Agarwal further emphasized that the GST system has significantly improved tax compliance and transparency.

Calls for Reform Ahead of Budget:

With the Union Budget just weeks away, the popcorn tax controversy has amplified calls for a simplified and user-friendly tax regime. The demand for GST reforms, particularly to address such classification issues, has gained momentum as stakeholders push for a system that aligns with the principles of simplicity and fairness.

(Input from various sources)

(Rehash/Sai Sindhuja K/MSM)