In December 2024, India’s Goods and Services Tax (GST) Council introduced a differentiated tax structure for popcorn, sparking widespread debate and criticism. The new tax rates are as follows:
- 5% GST on non-branded, loose popcorn mixed with salt and spices.
- 12% GST on pre-packaged and branded popcorn.
- 18% GST on caramel popcorn, categorized as sugar confectionery.
Finance Minister Nirmala Sitharaman defended the 18% tax on caramel popcorn, stating that products with added sugar are taxed differently.
However, this clarification did little to quell public discontent. Social media platforms were inundated with memes and satirical posts mocking the tax differentiation. Critics argue that such complexity undermines the original intent of the GST system, which was to simplify India’s tax structure.
Former Chief Economic Adviser K V Subramanian expressed concerns, stating, “Complexity is a bureaucrat’s delight and citizens’ nightmare.” He questioned the rationale behind a decision that contributes minimally to tax revenues but significantly inconveniences citizens.
Similarly, his predecessor, Arvind Subramanian, criticized the move for increasing complexity rather than simplifying the system, highlighting issues with enforcement and rationality.
Opposition politicians also voiced their disapproval. Jairam Ramesh, leader and spokesman of the main opposition Congress party, highlighted the “absurdity of three different tax slabs for popcorn under GST,” emphasizing the growing complexity of a system that was supposed to be straightforward.
This controversy is not an isolated incident. India’s GST system has previously faced criticism for its tax classifications. For instance, debates have arisen over different tax rates for chapatis versus other flatbreads and varying rates for dairy products.
Such instances underscore the challenges in creating a tax system that is both fair and straightforward.
In response to the backlash, the GST Council clarified that there has been no change in the tax rate of popcorn. The Council agreed that the Central Board of Indirect Taxes and Customs (CBIC) would issue a circular to clarify the current taxation regime of popcorn.
The popcorn tax controversy serves as a microcosm of the broader challenges facing India’s GST system. While the intent behind differentiated tax rates may be to categorize products appropriately, the resultant complexity has led to public frustration and calls for a more streamlined approach. As India continues to refine its tax policies, balancing revenue generation with simplicity and fairness remains a critical objective.
