18% GST on popcorn: It’s not just corn, tax authority explains what makes it premium food

Even as the Modi government introduced GST with the aim of ‘One Nation, One Tax’, hundreds of classification norms are still confusing businesses and customers across the country.

While GST on food is levied at the concessional rate of 5%, the humble popcorn packet has been moved to the elite tax slab of 18%, with tax authorities ruling that it is not just a standard cereal. A packet of corn, which needs to be heated before eating, would attract 5 per cent GST; but, the ready-to-eat popcorn bag is oiled and seasoned, and hence will attract 18 per cent tax, ruled the Authority for Advance Rulings (AAR). Even as the Modi government introduced GST with the aim of ‘One Nation, One Tax’, hundreds of classification norms are still confusing businesses and customers across the country. “Classification wars in GST has begun, which will lead to unearthing of massive tax demands and tax terrorism in the business community,” Rajat Mohan, Senior Partner, AMRG & Associates, told Financial Express Online.

Jay Jalaram Enterprises, a Surat-based manufacturer of puffed popcorns appealed AAR that its product should be taxed at 5 per cent as it contains corn, which is a cereal, but the AAR refused the appeal and imposed 18 per cent GST on puffed popcorn saying that after heating it with oil and seasoning, it does not remain grain. The ruling added that JJ Enterprise’s popcorn packets are ready to consume, unlike microwave popcorn packets that require heating to pop up the corns to make them edible. 

Also Read: Paratha is not roti, must be taxed at 18% GST; Anand Mahindra quips Indians will come up with jugaad

Similar news surfaced earlier this month when the Karnataka government ruled differentiating paratha or parota from roti, which are essentially two types of Indian breads. It clarified that paratha must be taxed at more than triple the GST tax rate on roti, therefore, the Authority for Advance Rulings (Karnataka bench) said that parathas must attract 18 per cent GST, while roti will be taxed at the concessional GST tax slab rate of 5 per cent.   

Meanwhile, GST on different items is broadly classified into five tax slabs of 3 per cent, 5 percent, 12 percent, 18 percent, and 28 percent. However, various cess over the GST and innumerable classification of items, changing with slight differences, have kept the industry in a state of confusion since the inception of GST in July 2017. 

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