The GST Council in its 55th Meeting chaired by Finance Minister Nirmala Sitharaman announced significant changes to the GST regime. In response to the recent “popcorn controversy,” the relevant minister clarified the varying tax rates applied to different types of popcorn. The explanation centered on the classification of popcorn and its preparation methods.
The minister stated that in some states, salted, caramelized, and plain popcorn are all sold under the category of “Namkeen,” which generally refers to savory snacks. However, a distinction arises due to the addition of sugar in caramelized popcorn. This addition alters its composition, leading to its classification as a sugar confectionery. Consequently, caramelized popcorn is subject to a different tax rate compared to other forms of Namkeen.
How To Tax Popcorn?
This clarification aligns with the tax treatment of other food and beverage items. The minister highlighted that similar tax distinctions exist for carbonated drinks and juices with added sugar, which attract different tax rates. This explanation aims to provide clarity on the seemingly complex tax system and its rational.
“Complexity is a bureaucrat’s delight and citizens’ nightmare,” India’s previous Chief Economic Adviser K V Subramanian wrote on X. He questioned the rationale of the decision he said will contribute minimally to tax revenues, but inconvenience citizens.
His predecessor, Arvind Subramanian, said “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”.
The changes introduced are as follows-
- Gene therapy has been exempted from the purview of the GST.
- Decision on whether restaurant services provided by electronic commerce operators should be taxed at 5% has been deferred. This decision will be taken by the fitment committee. Whatever decision is taken by the committee will be placed before the council for further actions.
- As far as the GST on online gaming is concerned, this issue did not feature in the deliberations of the committee despite being a topic of interest in previous discussions.
- States have rejected the proposal that the Aviation Turbine Fuel should be brought in the ambit of the GST.
- Group of Ministers discussed relief on health and insurance and the report will be finalised only after getting inputs from IRDAI. The GoM had allegedly recommended that health insurance for senior citizens and term life insurance should be exempted from the purview of the GST. It had also been recommended that the tax rate on health insurance policies with coverage up to Rs. 5 lakh should be reduced to 5%.
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