Congress criticises govt over caramel popcorn GST, asks if PM will show courage for GST overhaul

Following the Goods and Services Tax (GST) Council’s clarification on the three different tax slabs for popcorn, Congress called it an “absurdity” highlighting the system’s increasing complexity on Sunday (Dec 22). The party also questioned whether Prime Minister Narendra Modi and the Finance Ministry will show the courage to launch a remodelled GST 2.0.

On Saturday (Dec 21), Finance Minister Nirmala Sitharaman clarified the tax breakup of different types of popcorn during the GST Council, a video of which has gone viral on social media, sparking memes.

In the video, Sitharaman explains that ready-to-eat popcorn that has salt and spices is classified as ‘namkeens’ and attracts five per cent GST and 12 per cent on the pre-packaged and labelled ones. However, caramelised popcorn will attract 18 per cent GST as it is mixed with sugar.

“When popcorn is mixed with sugar thereby changing its character to sugar confectionary (Ex: caramel popcorn), it would be classifiable under HS 1704 90 90 [sugar confectionary] and attract 18 per cent GST,” Sitharaman said in the press briefing.

“When you talk outside it looks silly… but during discussions with states in Fitment Committee on every item, it is clearly mentioned that things with added sugar are treated differently… be it drinks, carbonated drinks, juice… whatever has added sugar. This is why, till the time popcorn is salted, it attracts five per cent GST. But when it has added caramelised sugar, it is no longer namkeen, hence, its rate is different,” Sitharaman added.

On Sunday (Dec 22), Congress general secretary in-charge communications Jairam Ramesh said that there is significant GST evasion. He also said that input tax credit fraud is common and many fraudulent companies set up to “game” the GST system, which 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.

“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. Recent data on tax frauds uncovered by the Directorate General of GST Intelligence (DGGI) reveal GST evasion of Rs 2.01 lakh crore in FY24,” he described. 

“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.

(With inputs from agencies)