The Central Board of Indirect Taxes & Customs (CBIC) has issued a clarification on GST rates applicable to different categories of popcorn, settling ongoing disputes over tax interpretation. The board has also regularised rate disputes on specific popcorn varieties until February 14, 2025, ensuring relief for businesses facing uncertainties.
GST on Popcorn: Three-Tier Tax Structure
The latest CBIC circular introduces a three-tier GST structure for ready-to-eat (RTE) popcorn, based on its preparation and packaging:
- Loose RTE Popcorn (salted/spiced): 5% GST
- Pre-packaged & labelled RTE Popcorn (salted/spiced): 12% GST (categorized as 'namkeen')
- Sugar-coated popcorn (e.g., caramel popcorn): 18% GST (classified as sugar confectionery)
The decision follows a request from Uttar Pradesh, leading the GST Council to deliberate on the issue during its December 21, 2024, meeting. The council concluded that genuine doubts existed regarding tax rates on ready-to-eat popcorn mixed with salt and spices, prompting CBIC to issue this clarification.
No New Tax, Only Clarification
CBIC has emphasized that no new tax has been imposed. Instead, the circular aims to resolve disputes arising from varied interpretations of GST rates by field officers. The clarification ensures uniformity and prevents businesses from being charged retrospectively.
GST on Popcorn in Movie Theatres: What's the Impact?
Previously, GST experts debated whether salted popcorn consumed in movie theatres should be taxed at 18%, considering it part of a bundled supply with movie tickets. The government has now clarified:
- Loose popcorn sold independently at theatres = 5% GST (classified under restaurant service).
- Bundled popcorn (with discounted online ticket booking) = 12% or 18% GST, based on the ticket price.
- Cinema tickets < Rs 100: 12% GST | Tickets > Rs 100: 18% GST
Implications for Consumers & Businesses
Multiplexes and online ticket booking platforms offering popcorn as part of combo deals must assess whether such sales qualify as 'composite' or 'mixed supply' under GST. The latest ruling helps standardize taxation, preventing confusion for both businesses and consumers.
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