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Published on:

December 26, 2024

Viraaj Vashishth

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Pop the GST on Popcorn Buzz: The New GST Rates and FAQs

Popcorn which is known as a staple while enjoying a movie or a tv series is getting a lot of publicity concerning its goods and services tax (GST) classification in India to the extent that it is the talk of the town. The 55th GST council meeting has come up, in detail, with how various kinds of popcorn should be taxed, thereby affecting consumers and cinema operators alike. Have you ever thought about how much tax you pay on that buttery popcorn at the cinema? Brace yourselves because we are about to crack down the GST on popcorn.

What Is GST and Its Structure

The Goods and Services Tax (GST) is a more streamlined and efficient model of taxation that is simple and operates from the premise of taxation at consumption and not at the point of supply as was the case in the past. The transactions under GST are liable to the following rates: 0%, 5%, 12%, 18%, and 28%. In the past supply-side taxation, many indirect taxes were avoided which made the entire system of taxation complex. These commodities have been assigned Harmonized System of Nomenclature (HSN) codes for the purposes of ascertaining the GST rates which are applicable to them.

You Can Also Read: Impact of GST on FMCG Sector

New Tax Rates on Popcorn

Popcorn consumption falls under different tax rates depending on how it’s prepared or packed according to the taxation guidelines set by the GST council. Below are the rates on different types of popcorn.

1. Non-branded, Loose Popcorn: This type of popcorn is prepared at the outlet or counter and people are charged 5% thus this is where you see the least bumps during purchasing.

2. Pre-packaged and Branded Popcorn: As for the prepackaged popcorn, there is a slight bump in the price considering it is packaged with the brand label. An example could be those popcorn bags that are popcorn coming in at about a 12% GST registration.

3. Caramelized or Flavored Popcorn – Popcorn coated with sugar would be considered as a sweet box in section HSN code 1704.90. Among all types of candies, sugar popcorn tends to be the most expensive with the highest GST setting at 18%.

4. Combo Hassle (Ticket is the deciding factor): This is for those who prefer getting combo meals- the GST for the combo corn and a movie would be the same. More often, the tax rate charged alongside a movie ticket would be 18%.

The GST rates for different types of popcorn are summarized as follows:

Type of Popcorn	GST Rate	Classification
Non-branded, Loose Popcorn	5%	Namkeen
Pre-packaged and Branded Popcorn	12%	Ready-to-eat snacks
Caramelized or Flavored Popcorn	18%	Sugar confectionery (HSN code 1704.90)
Popcorn sold with a movie ticket (bundled)	-	Movie Ticket GST Rate

You Can Also Read: Rice HSN Code & GST Rate - 1006

How Does It Impact You?

So, does this mean that popcorn will now be very expensive? Well, it’s a bit of Yes and No. Yes, the increased GST may mean that there might be a marginal increase in the prices, but otherwise it pretty much depends from cinema to cinema.

Let’s say you’re at a movie and you’re looking for the menu at the concession stand. At the stand, you see a loose salted popcorn going for a hundred rupees, a packaged popcorn for 120, and caramelized popcorn for 150. Let’s examine how GST affected me in this scenario even further by looking at each of those possible scenarios as well as their prices after tax.

In the case of loose salted popcorn for instance, which is also the cheapest, the base price is one hundred and the added tax of five percent is five rupees, making the total amount five rupees which pushes the total amount to one hundred and three rupees and thirty-eight cents. This option is mostly favored in the majority of the population who are price sensitive.

The rate of GST on the branded popcorn which is pre-packed is 12%. Tax of 14.4 Indian rupees is charged on the base price of 120 Indian rupees which total to 134.4 Indian rupees. The ready-to-eat snack prices are either moderately or slightly higher than the rest owing to the provisions under GST pertaining to branded goods.

Caramel popcorn being sugar based confectionery is subject to tax of 18%. Now to the sum of 150 Indian rupees that acts as the base price, 27 Indian rupees is added courtesy the GST that means the final amount paid out is 177 Rupees. It is the most expensive option because of its classification and the high taxation bracket meaning that consumers who are looking for higher snacks in order to satiate their desires will find this option very suitable.

This is an instance indicating the operation of the tie between the various slabs of GST and price of popcorn sold at the movie theaters. This includes that the customers who are not very reliant on the price will only be confined to purchasing the loose popcorn and those who wish to purchase the branded popcorn or flavored one will have to pay a heavy price due to the GST. The theater operators on the other hand have no option but to use high pricing strategies to ensure profitability without doing much harm to their customers.

Conclusion

It is important for consumers wanting to make right choices and business entities wishing to comply and price right to understand the implications of GST on popcorn. As the GST system is prone to change, it is good to know such definitions so as to be able to cut through economic jargon when having popcorn at the movies.

FAQs

1. What is the GST rate applicable to popcorn served in theatres?

The GST rate related to the popcorn is as follows: loose popcorn 5%, packaged/proprietary popcorn 12% & flavored/popcorn with syrup 18%.

2. What is the reason that caramelized popcorn is levied an 18% GST?

For HSN classification, caramelized popcorn is put under the category of sugar confectionery (HSN 1704.90), which is rated under 18% GST.

3. How has the introduction of GST on sale of popcorn in cinemas affected its pricing?

With regard to different classifications of popcorn, GST raises the basic price of popcorn, among all taxation rates caramelized popcorn bears the burden of the highest level of taxation.

4. For both branded and ordinary popcorn, what is the difference in the GST levy?

Yes, non-branded loose popcorn is subjected to 5% GST while packaged branded popcorn is subjected to 12% GST.

5. When GST is imposed on flavored variants such as caramel corn or cheese corn, what is the tax rate levied?

Due to its inclusion as a sugar confectionery or as a food item that has been prepared, flavored varieties are categorized under 18%.

6. Is popcorn GST rate the same across all the Indian States?

Since GST is a central level tax, the same rate is applicable to popcorn across all the states in the country.

7. What is the HSN code for GST caramelized popcorn?

A specific popcorn titled caramelized popcorn has the HSN of 1704.90, which comes under the 18% GST bracket.

8. How do cinemas account for popcorn in the context of GST?

Cinema owners explain that different types of popcorn are classified and the relevant GST is charged in order to avoid penalties.

9. Why is the GST on non-branded goods now stated to be less than that on other food items?

As loose popcorn not bearing a brand is placed in a lower level category as a food item (namkeen) that has a lower GST of 5%.

10. Can there be a combo of popcorn and tickets to some HSN based reduction on the popcorn ticket?

When popcorn is sold along with a movie ticket in a combo, there could be a case for applying the lower tax rate applicable to the main supply which is the movie ticket.

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