Amid social media debate over Finance Minister Nirmala Sitharaman’s take on three different tax slabs for popcorn under Goods and Services Tax (GST), Congress on Sunday said the “absurdity” of it only brings to light the growing complexity of the system and asked whether the Modi government will show the courage to launch a complete revamp for instituting a GST 2.0.
GST Council on Saturday agreed to issue a clarification on taxation of popcorn, saying that pre-packed and labelled ready-to-eat snacks will attract a 12 per cent tax while an 18 per cent GST will be levied if it is caramelised.
A video of Finance Minister Nirmala Sitharaman’s briefing over the 55th meeting of the GST Council that took place on December 21 has been going viral. In the video, Sitharaman clarified that ready to eat popcorn which is mixed with salt and spices are classifiable under ‘namkeens’ attracts five per cent GST if supplied as other than pre-packaged and labelled and 12 per cent GST if supplied as pre-packaged and labelled.
“However, 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 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, it’s rate is different,” Sitharaman added.
Congress slams govt
Congress general secretary in-charge communications Jairam Ramesh on Sunday claimed GST evasion is significant, input tax credit fraud is common, and the number of bogus companies set up to “game” the GST system 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.
“GST evasion is significant, input tax credit fraud is common, and the number of bogus companies set up to ‘game’ the GST system runs into thousands.
“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,” Ramesh said.
He said the recent data on tax frauds uncovered by the Directorate General of GST Intelligence (DGGI) reveal GST evasion of ₹2.01 lakh crore in FY24.
“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.