The tax treatment of popcorn has become a huge political hot potato after the (GST) Council Meeting, led by Finance Minister Nirmala Sitharaman, notified different taxation rates on salted and caramelised popcorn. Amid huge discussions, there are speculations around how much tax people will pay on the snack while purchasing it in movie theatres.

How much tax will be imposed on popcorn sold in movie theatres?

Popcorn is generally sold in loose form in movie theatres, so it attracts a lower Goods and Services tax (GST) rate than salted and caramelised popcorn sold in packets.

Popcorn sold in loose form in movie theatres will continue to attract a GST at 5 per cent like in restaurants, government sources told Press Trust of India.

The tax on popcorn in movie theatres can be different if the snack is purchased along with a movie ticket. According to the news agency, if the popcorn is clubbed and sold together with a movie ticket, the supply would be treated as a composite supply and taxed as per the applicable rate of the principal supply, which is the ticket.

Popcorn tax explained

The government charges a 5 per cent GST on non-branded popcorn mixed with salt and spices, as specified by the GST Council, chaired by Nirmala Sitharman on December 21.

GST on popcorn will increase to 12 per ccent when they are sold in packets under a brand name. Meanwhile, the GST increases to a further 18 per cent when the branded popcorn is caramelised.

The differential rates came into effect immediately, ending confusion over rates, as popcorn was taxed differently across states.

GST on salted popcorn

Ready-to-eat popcorn, which is mixed with salt and spices and is essentially namkeen, attracts a 5 per cent GST. If the item is supplied as a pre-packaged and labelled item, then it attracts a 12 per cent GST.

Caramel popcorn GST

Popcorn is categorised differently when mixed with sugar, also known as caramel popcorn. The simple improvisation changes its essential character to that of sugar confectionary and would, therefore, attract an 18 per cent GST, as per the council clarification.

Explaining the reasons behind different GST on caramel popcorn, FM Sitharaman said, "Salted, caramelised, plain popcorn is being sold as namkeen in certain states. Caramelised popcorn comes with added sugar, so the treatment of rate is different from namkeen."

Caramel popcorn will be classified under HS 1704 90 90, part of the Harmonised System (HS) classification. It is a multipurpose international goods nomenclature developed by the World Customs Organisation (WCO).