GST rate on popcorns-all doubts cleared!

The 55th GST Council meeting has brought forth a much-needed clarification regarding the tax classification of ready-to-eat popcorn, particularly those mixed with salt, spices, or sugar. Over time, varying interpretations of GST rates across field units have led to confusion and disputes. To address this, the GST Council has proposed a clear framework to ensure consistency in taxation. 

Let’s understand the details!

Proposed change

To clarify ready-to-eat popcorn which is mixed with salt and spices is classifiable under HS 2106 90 99 and attracts 5% GST if supplied as other than pre-packaged and labeled and 12% GST if supplied as pre-packaged and labeled. However, when popcorn is mixed with sugar thereby changing its character to sugar confectionery (eg caramel popcorn), it would be classifiable under HS 1704 90 90 and attract 18% GST. It has been decided to regularize the issues for the past on an “as is where is” basis. (Note: There is no new imposition of any tax in this regard and this is merely a clarification as certain field units were demanding different tax rates on the same. Therefore, it is a clarification being recommended by the GST Council to settle the disputes arising out of interpretation.)

Key Highlights

• Classification of Popcorn with Salt and Spices: Ready-to-eat popcorn mixed with salt and spices is classified under HS 2106 90 99.
  • 5% GST for non-pre-packaged, unlabelled popcorn.
  • 12% GST for pre-packaged and labeled popcorn.
• Popcorn with Sugar: When popcorn is mixed with sugar (e.g., caramel popcorn), it is classified as sugar confectionery under HS 1704 90 90 and attracts 18% GST.
• Past Issues Regularization: The clarification applies on an "as is where is" basis, addressing past issues without changing existing tax rates. It means that the persons who have paid GST at 5% or 12% on popcorn with sugar, are not required to pay differential tax till the date of the expected circular.

Conclusion

To conclude, the recent clarification issued by the GST Council brings much-needed clarity regarding the classification and GST rates applicable to ready-to-eat popcorn. By clearly distinguishing between popcorn mixed with salt and spices (which falls under a 5% or 12% GST, depending on the packaging) and popcorn mixed with sugar (classified as a sugar confectionery with an 18% GST), the Council has addressed confusion that arose from varying interpretations of tax laws. Importantly, this clarification is not an imposition of new taxes but a regularization of past issues, ensuring fair and consistent application of GST. With this resolution, businesses and authorities can confidently proceed with the correct classification, settling previous disputes and ensuring uniformity in tax practices.

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