The Goods and Services Tax (GST) regime has brought uniformity in indirect taxation, but the introduction of varying GST rates on popcorn is likely to complicate its implementation, say tax experts. Popcorn, a popular snack, currently falls under the 5% or 18% GST slab, depending on factors like packaging and branding.
Source:- bbc news
Experts caution that implementing varying rates for popcorn could create confusion among businesses, leading to classification disputes. For example, unbranded or unpackaged popcorn is typically taxed at 5%, while branded and packaged variants attract an 18% rate. The differentiation relies on nuanced criteria, such as whether the popcorn is sold ready-to-eat or pre-packed for retail. These distinctions can be challenging for businesses to navigate and may result in misclassifications, penalties, or disputes.
Source:- bbc news
Further, the compliance burden for small-scale sellers could increase as they may need to maintain detailed records to differentiate between popcorn sold in different forms. Large multiplexes or cinema halls might also face operational challenges when accounting for popcorn sold at counters.
Experts argue that a single tax rate for popcorn would simplify compliance and eliminate disputes, ensuring a level playing field for all sellers. While varied GST rates aim to distinguish between essential and luxury items, in practice, they often lead to litigation and ambiguity, as seen in similar cases for chocolates, biscuits, and snacks.
The government is urged to consider the practical challenges of varying GST rates and aim for clearer guidelines or a uniform tax structure for popcorn. Simplifying the tax regime can promote ease of doing business and prevent unnecessary legal disputes in the future.
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