GST On Popcorn: How Much Tax You Will Pay For The Popular Snack?

New Delhi: Finance Minister Nirmala Sitharaman-led GST Council clarified varying GST rates on different kinds of popcorn that had confused cinema exhibitors and consumers alike. The decision was made on December 21 during the 55th GST Council meeting that specifies rates based on popcorn type and its mode of sale.

PTI report reveals that popcorn sold loose in the cinema halls will still be liable to attract a 5 per cent GST like restaurants if sold without being bundled with a cinema ticket. However, if popcorn is paired with a movie ticket, it will be held as a composite supply and attract the rate applicable to the ticket. Pre-packaged and branded popcorn containing salt and spices will attract a 12 per cent GST. Caramelized popcorn, classified as sugar confectionery, will now be taxed at 18 per cent.

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GST Council clarified popcorn tax rates for various types.

The council confirmed that there has been no change in the GST rate on loose popcorn served in theatres, remaining at 5 per cent. This clarification follows a request from the Uttar Pradesh government to specify the tax rate for popcorn seasoned with salt and spices. Such popcorn is classified as "namkeen" under GST rules and retains the lower rate unless pre-packaged and labelled.

Multiplex Chains Welcome the Move, Concerns Remain Over Caramelized Popcorn Tax

Multiplex chains like PVR Inox and Miraj Cinemas welcomed the clarification, stating that the GST rate for loose popcorn remains unchanged. However, single-screen cinema exhibitors, including Vishek Chauhan, raised concerns about the 18 per cent GST rate on caramelized popcorn sold in packaged form, noting that it could impact consumer spending habits. 

Under GST, the product is classified by the Harmonized System (HS), which is an international nomenclature developed by the World Customs Organization  (WCO). By this system, a GST rate can be defined for products such as popcorn because of the composition and package type.

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While the clarification brings a respite to consumers purchasing loose popcorn at theatres, the higher rates for packaged and caramel variants might determine the pricing strategies and the choices of consumers. This is likely to bring much-needed simplicity to taxation and clear disputes related to the classification of popcorn.