GST rate on popcorn: Key questions answered

Popcorn has garnered major attention after the 55th GST Council meeting at Jaisalmer, Rajasthan, on December 21. The high-level meeting attended by Finance Minister Nirmala Sitharaman and Indian states’ finance minister and other officials deliberated the application of the goods and services tax (GST) on the popular snack enjoyed at cinemas, amusement parks, and elsewhere as a general snack.

With various types of popcorn products, ranging from plain to spicy or salted, there has been confusion about the GST rates applicable to them. Here’s a set of answers to the most common questions surrounding GST on popcorn, including classification, varying rates, and whether popcorn prices will increase in theaters. 

Q1. Has the GST rate on popcorn been increased?

There has been no increase in the GST rate on popcorn in the recently held GST Council meeting. A request was received from the State of Uttar Pradesh to clarify the classification and GST rate applicable on popcorn mixed with salt and spices. This issue was taken to the 55th GST Council, and the Council recommended to clarify the same.

2. What is the basis for varying rates on different types of popcorn?

All goods, including food items, are classified under GST as per the Harmonised System (HS) classification, which is a multipurpose international goods nomenclature developed by the World Customs Organisation (WCO). This system is used by over 200 countries covering over 98% of the international trade. The varying GST rates are only consequential to the classification of the commodity under the different chapters of the HS system.

As per the HS classification, sugar confectionary falls under HS 1704 in Chapter 17. All sugar confectionary, other than a few specified items, attract 18% GST.

In India, namkeens are classified under HS 2106 90 99. Namkeens attract 5% GST when sold in other than pre-packaged and labelled form and 12% GST when sold in pre-packaged and labelled form.

3. What was the objective in issuing the clarification?

The Council recommended the issuance of clarification to facilitate the resolution of classification disputes in the field on ready-to-eat popcorn that is mixed with salt and spices.

4. Will the sale of popcorn get more expensive in theatres?

Generally, popcorn is served to customers in theatres in loose form and hence will continue to attract a rate of 5% as applicable to ‘restaurant service’ as long as supplied independent of the cinema exhibition service.