GST Simplifies Popcorn Tax: Sweet and Salty at 5%

The GST Council of India has recently resolved a long-standing debate over the taxation of popcorn, providing clarity for both vendors and consumers. Under the new GST 2.0 framework, all types of popcorn—salted or caramel—will now attract a uniform Goods and Services Tax rate of 5%. This update marks a significant change from previous tax structures, where branded popcorn faced a 12% tax, while loose popcorn was exempt from GST altogether.

Initially, when the Goods and Services Tax was introduced on July 1, 2017, popcorn was categorized under varying tax slabs depending on how it was sold. Branded and packaged popcorn attracted a higher tax, while loose popcorn was treated differently, leading to confusion among small vendors and multiplexes alike. The situation became even more complex when multiplexes argued that popcorn sold in cinema halls should be taxed as a restaurant service at 5%, rather than as a packaged commodity at 12%.

This dual structure and the ensuing confusion prompted the GST Council to redefine popcorn's classification in 2019. It was determined that popcorn sold at cinema or restaurant-style counters would be taxed at the reduced rate of 5%, while packaged popcorn would retain the higher 12% tax. This demarcation faced legal challenges over the years, causing further delays in establishing a clear tax policy.

In 2022, the Multiplex Association of India effectively lobbied for a more uniform treatment of snacks, arguing that popcorn is prepared fresh and should not be grouped with fast-moving consumer goods (FMCG). The issue resurfaced in 2023 during discussions on rationalizing the tax structure, as various snacks, including popcorn, namkeen, and chips, were flagged for having multiple tax slabs.

With snack prices soaring in multiplexes in 2024, debates reignited over whether cinema popcorn should be considered a luxury or a basic snack. The government's decision to apply a flat 5% tax on all popcorn flavors—salted or caramel—has put an end to this ongoing debate. Now, popcorn lovers can enjoy their favorite snacks without the worry of fluctuating tax rates.

In conclusion, the GST Council’s decision to standardize the tax rate for popcorn is a welcome move for consumers and vendors alike, simplifying the purchasing process and enhancing the overall popcorn experience in India.