The Goods and Services Tax council’s clarification on Saturday regarding the taxability of different varieties of popcorn has caused a fresh stir, with former Chief Economic Adviser Arvind Subramanian calling it a “national tragedy”.
After the council’s 55th meeting in Jaisalmer, it clarified that ready-to-eat popcorn is taxed at 5%, pre-packaged popcorn is subject to a 12% tax, and caramel popcorn attracts an 18% Goods and Services Tax.
It noted that ready-to-eat popcorn mixed with salt and spices has the essential character of a namkeen, which currently attracts a 5% tax if it is not pre-packaged and labelled. If it is supplied as pre-packaged and labelled, a 12% tax is levied.
However, when popcorn is mixed with sugar (caramel popcorn), its essential character changes to that of sugar confectionery, and it would therefore attract an 18% Goods and Services Tax.
“There is no new imposition of any tax in this regard and is merely a clarification as certain field units were demanding different tax rates on the same,” stated the council. “Therefore, it is a clarification being recommended by the GST Council to settle the disputes arising out of interpretation.”
Following this, Congress leader Jairam Ramesh said that the different rates of taxation for varieties of popcorn were “absolutely unbelievable”. He called the move “sheer madness”.
Subramanian said the move violated “the spirit of the Good and Simple Tax the GST was meant to be”.
“The folly is compounded because instead of at least moving in the direction of simplicity we are veering to greater complexity, difficulty of enforcement and just irrationality,” said the former chief economic adviser.
During the meeting, the council deferred a decision on taxes levied on health and life insurance premiums, reported The Indian Express.
Currently, health insurance, term life insurance, and unit-linked insurance plans attract an 18% Goods and Services Tax. Endowment plans are charged at a rate of 4.5% in the first year and 2.25% from the second year onwards. Single premium annuity policies for life insurance carry a 1.8% tax.
On Sunday, Shiv Sena (Uddhav Balasaheb Thackeray) leader Priyanka Chaturvedi said the council deferring review of the Goods and Services Tax on life and health insurance policies showed its “priorities”.
“When taxing popcorn is a more important discussion than lowering/waiving off GST on health and term insurance,” she said in a social media post.
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