Sugar, Spice, and GST Invoice

During the 55th GST Council meeting, chaired by Finance Minister Nirmala Sitharaman, it was clarified that unpackaged salted popcorn will attract a 5% GST, while pre-packaged and labelled varieties will incur a 12% tax. In contrast, caramel popcorn, which contains added sugar, will be taxed at a higher rate of 18%, categorising it as a sugar confectionery.

Irrespective of whether one sees caramel popcorn as an abomination of a flavour or loves to snack on them getting their fingers all sticky this classification has drawn criticism for its complexity, as it introduces three different tax rates for what is essentially the same overpriced snack inside a cinema theatre.

Critics, including former economic advisers and opposition politicians, have labelled the move as indicative of a convoluted tax system that strays from the original intent of the GST as a “Good and Simple Tax”.

The decision has also led to a wave of memes and humorous commentary on social media, reflecting public frustration over the perceived absurdity of taxing popcorn differently based on its ingredients.

Meanwhile, the GST Council has stated that this clarification aims to resolve existing ambiguities and disputes regarding the taxation of popcorn products, with further guidance expected from the Central Board of Indirect Taxes and Customs (CBIC).

Jargon

Viewpoints 💭

  • The left criticises the GST Council’s decision as an example of the overly complex and bureaucratic nature of the GST system, which they argue hinders business ease and consumer understanding.
  • They argue that the differentiated tax rates on popcorn, particularly the 18% GST on caramel popcorn, reflect an approach that penalises product upgrades and innovation.
  • The left views the GST system as a failure in its original intent to simplify taxation, calling for a comprehensive overhaul to address issues like evasion, fraud, and misclassification.
  • Critics from the left highlight the minimal revenue gain from such complex tax structures, questioning the rationale behind taxing similar products differently.
  • The left emphasises the need for a simplified ‘GST 2.0’ to ensure fair taxation and reduce the administrative burden on businesses and consumers.
  • The left criticizes the GST Council’s decision as an example of bureaucratic inefficiency, while the right defends it as necessary for aligning with broader GST rules and public health objectives.
  • While the left views the differentiated tax rates as an approach that penalises innovation, the right justifies them as consistent with the taxation of sugary products.
  • The left calls for a comprehensive overhaul of the GST system to address issues like evasion and fraud, whereas the right sees the clarification as a step towards resolving existing ambiguities.
  • Critics from the left highlight the minimal revenue gain from complex tax structures, questioning their rationale, while the right emphasises the importance of maintaining a structured tax system.
  • The left emphasises the need for a simplified ‘GST 2.0,’ while the right supports the current system’s adaptability to diverse product classifications and consumer behaviours.
  • The right defends the GST Council’s decision, arguing that the differentiated tax rates are necessary to align with broader GST rules and the concept of ‘sin taxes’ aimed at influencing public health.
  • They justify the 18% GST on caramel popcorn by categorising it as sugar confectionery, consistent with the taxation of other sugary products.
  • The right views the clarification as a necessary step to resolve existing ambiguities and disputes over GST interpretations, not as a new tax imposition.
  • Supporters argue that the GST system, despite its complexity, is designed to ensure fair taxation across different product categories based on their ingredients and health implications.
  • The right emphasises the importance of maintaining a structured tax system that can adapt to diverse product classifications and consumer behaviors.

Prominent Voices 📣

  • Jairam Ramesh (Congress Party Leader and Spokesman): Criticised the GST system’s complexity, calling for an overhaul due to issues like evasion and fraud. 1 2
  • Arvind Subramanian (Former Chief Economic Adviser): Criticised the GST decision for adding complexity and irrationality to the tax system, highlighting enforcement challenges. 1 2
  • K V Subramanian (Former Chief Economic Adviser): Criticised the GST decision as unnecessarily complex and inconvenient for citizens, questioning its revenue impact. 2 3
  • Nirmala Sitharaman (Finance Minister of India): Explained the rationale behind different GST rates for popcorn, emphasising the classification based on sugar content and the need for clarity in taxation rules. 4 5

Sources 📚

1
The HinduHow to tax popcorn? GST council’s formula sparks outrage
2
The Times of IndiaGST Council’s popcorn taxation sparks backlash on social media
3
The StatesmanLights, Camera, Popcorn: netizens troll centre’s decision to escalate tax on caramel popcorn
4
India TodayCaramel Popcorn tax: Nirmala Sitharaman explains why Government levied extra GST
5
The Times of IndiaWhy Government has levied extra GST on Caramel Popcorn

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