No increase in GST on popcorn, no impact on prices at theatres: Govt Sources

Amid backlash from several quarters, including the former chief economic adviser (CEA) Arvind Subramanian, over the recent clarification by the GST Council on the tax on popcorn, government sources have pointed out that there has been no increase in the GST rate on pop corn, adding there will no impact on popcorn sold in theatres.

“Popcorn is served to customers in theatres in loose form and hence will continue to attract a rate of 5%, as applicable to ‘restaurant service’ as long as supplied independent of the cinema exhibition service,” said sources.

Netizens rose up in arms last week when the Council reiterated the existing 5%, 12% and 18% tax slab on the pop corn, depending on the nature of the product. Subramanian also took a dig at the centre on the pop corn tax issue, saying GST is drifting towards “greater complexity”, irrationality.”

A request was received from Uttar Pradesh to clarify the classification and GST rate applicable on popcorn mixed with salt and spices. This issue was taken to the 55th GST Council and the Council recommended to clarify the same,” the source added.

“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% of the international trade. The varying GST rates are only consequential to the classification of the commodity under the different chapters of the HS system,” the sources pointed out.

“As per the HS classification, sugar confectionary falls under HS 1704 in Chapter 17. All sugar confectionary, other than few specified items, attract 18% GST. In India, namkeens are classified under HS 2106 90 99. Namkeens attract 5% GST when sold in other than pre-packaged and labelled form and 12% GST when sold in pre-packaged and labelled form,” the sources pointed out.

On why the clarification became necessary, the sources said issuance of clarification was done to facilitate resolution of classification disputes in the field on ready to eat popcorn that is mixed with salt and spices.