The 55th GST Council meeting, held in Jaisalmer under the leadership of Union Finance Minister Nirmala Sitharaman, brought renewed focus on GST rates within the food industry, with popcorn emerging as a central point of debate. While key issues like reducing GST on food delivery services via platforms like Swiggy and Zomato remained unresolved, the Council provided clarifications on the varying GST rates applied to different types of popcorn.
Popcorn GST Rates: Different Varieties, Different Taxes
The Council clarified the tax classification for ready-to-eat popcorn varieties, addressing longstanding confusion and disputes among businesses and tax authorities. According to the clarification:
- Salted and Spiced Popcorn: Classified as a namkeen, attracting 5% GST if not pre-packaged and labelled, and 12% GST if pre-packaged and labelled.
- Caramel Popcorn: With added sugar, it is categorized as a confectionery product and will attract 18% GST.
This clarification sparked backlash, with Congress leader Jairam Ramesh calling the differentiation ‘sheer madness.’ The Council maintained that no new taxes were imposed, but the clarification was necessary to resolve disputes.
Deferred Decisions on Food Delivery GST
Despite discussions, the Council deferred any decision on GST for food delivery platforms. The ongoing debate revolves around whether the tax should match the 5% GST applied to restaurant food or a higher rate.
Union Finance Minister Nirmala Sitharaman stated that the Fitment Committee will re-examine the issue in subsequent meetings.
Other Key Decisions Impacting the Food Sector
- Fortified Rice Kernels: GST reduced from 18% to 5%, irrespective of end use.
Food industry stakeholders have expressed mixed reactions. While clarity on popcorn GST is seen as a resolution to existing confusion, delays in decisions on food delivery tax rates continue to create uncertainty.
The GST Council is expected to reconvene to address pending concerns, including the taxation of food delivery services and other unresolved food industry issues, in future meetings.