Congress Slams Centre Over GST Complexity Amid 'Popcorn Tax' Debate, Calls For Overhaul

Amid a heated social media debate over Finance Minister Nirmala Sitharaman's comments on three different tax slabs for popcorn under the Goods and Services Tax (GST), the Congress on Sunday criticised the "absurdity" of the situation.

The party argued that it highlights the increasing complexity of the GST system and questioned whether the Modi government would have the courage to initiate a complete overhaul to introduce a GST 2.0.

The GST Council on Saturday agreed to clarify the taxation of popcorn, stating that pre-packaged and labelled ready-to-eat snacks would attract a 12 per cent tax, while caramelised popcorn would incur an 18 per cent GST.

A video of Nirmala Sitharaman's briefing following the 55th meeting of the GST Council on December 21 has been widely shared online. In the video, Sitharaman explained that ready-to-eat popcorn mixed with salt and spices is classified as "namkeens" and attracts 5 per cent GST if not pre-packaged and labelled, but 12 per cent GST if it is pre-packaged and labelled.

"However, when popcorn is mixed with sugar, thereby changing its character to sugar confectionery (e.g., caramel popcorn), it would be classifiable under HS 1704 90 90 [sugar confectionery] and attract 18 per cent GST," Sitharaman stated during the press briefing.

"When you talk outside, it looks silly... but during discussions with states in the Fitment Committee on every item, it is clearly mentioned that things with added sugar are treated differently... be it drinks, carbonated drinks, juice... whatever has added sugar. This is why, till the time popcorn is salted, it attracts 5 per cent GST. But when it has added caramelised sugar, it is no longer namkeen, hence, its rate is different," Sitharaman added.

Congress Criticises the Government

Congress General Secretary in charge of communications Jairam Ramesh on Sunday claimed that GST evasion is widespread, input tax credit fraud is rampant, and thousands of bogus companies have been created to exploit the GST system.

"The absurdity of three different tax slabs for popcorn under GST, which has unleashed a tsunami of memes on social media, only brings to light a deeper issue: the growing complexity of a system that was supposed to be a Good and Simple Tax," he wrote in a post on X.

"GST evasion is significant, input tax credit fraud is common, and the number of bogus companies set up to 'game' the GST system runs into thousands.

"Tracking of supply chains is weak, the registration process is flawed, advantages are being taken of loopholes in turnover exemptions, compliance requirements are still cumbersome, and misclassification of goods is frequent," Ramesh added.

He pointed to recent data from the Directorate General of GST Intelligence (DGGI), which uncovered GST evasion of ₹2.01 lakh crore in FY24.

"With the Union Budget now just 40 days away, will the PM and FM summon the courage to launch a complete overhaul and institute a GST 2.0?" Ramesh questioned.