Popcorn GST Debate Sparks Controversy: Congress Calls for Simpler Tax System with GST 2.0

Recently, there has been a lot of discussion on social media about Finance Minister Nirmala Sitharaman’s explanation of different GST rates for popcorn. The Congress party called the situation “absurd” and highlighted the growing complexity of the tax system. They questioned whether the Modi government is ready to reform the system and introduce a simpler GST 2.0.

During the GST Council meeting on December 21, it was clarified that pre-packaged and labeled popcorn would be taxed at 12%, while caramelized popcorn would have an 18% tax. A video of Sitharaman explaining this went viral. She said that salted popcorn mixed with spices, if sold unpackaged, is taxed at 5%. However, if it is pre-packaged, it is taxed at 12%. On the other hand, popcorn with added sugar is classified as a sugary product and taxed at 18%.

Sitharaman explained that this categorization applies to many products. Items with added sugar, like carbonated drinks and juices, are taxed differently. She said that while it may sound strange to the public, these rules are clearly defined in committee meetings with states. She added that salted popcorn is a savory snack and taxed lower, but adding caramelized sugar changes its category, leading to a higher tax.

Congress Criticizes the Government

Congress leader Jairam Ramesh criticized the government over the complexities of the GST system. He pointed out that having three different tax rates for popcorn has become a popular topic for memes on social media. However, he stressed that this reflects a bigger issue: the tax system, which was meant to be “Good and Simple,” has become too complicated.

Ramesh also highlighted major problems like GST evasion, input tax credit fraud, and the creation of fake companies to misuse the GST framework. He mentioned flaws in tracking supply chains, the registration process, and turnover exemptions, all of which lead to compliance issues and confusion in classifying goods.

He referred to data from the Directorate General of GST Intelligence (DGGI), showing that ₹2.01 lakh crore was lost to GST evasion in 2024. With the Union Budget just weeks away, Ramesh questioned whether Prime Minister Modi and Finance Minister Sitharaman would take bold steps to reform GST and introduce a simpler GST 2.0 system.