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| Photo Credit: BISWARANJAN ROUT

Exhorting the Narendra Modi government to show the courage to overhaul the Goods and Services Tax (GST) regime citing the “absurdity” of three different tax slabs for popcorn under the present system, the Congress on Sunday (December 22, 2024) said the current complexities in the system had thrown open several loopholes leading to tax evasion. 

In a long post on X, Congress General Secretary (Communications) Jairam Ramesh said, “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.”

These complexities, he said, were leading to significant GST invasion, input tax credit fraud was common, and the number of bogus companies set up to ‘game’ the GST system ran into thousands.

“Tracking of supply chains is weak; the registration process is flawed; advantages are being taken out of loopholes in turnover exemptions; compliance requirements are still cumbersome; and misclassification of goods is frequent,” Mr. Ramesh said.

He said the recent data on tax frauds uncovered by the Directorate General of GST Intelligence (DGGI) reveal GST evasion of ₹2.01 lakh crore in FY24.

“With the Union Budget now just 40 days away, will the Prime Minister and the Finance Minister summon the courage to launch a complete overhaul and institute a GST 2.0?” Mr. Ramesh asked.

The GST Council on Saturday agreed to issue a clarification on taxation of popcorn, saying pre-packed and labelled ready-to-eat snacks will attract a 12% tax while an 18% GST will be levied if it is caramelised. There is no change in the tax rate of popcorn and the GST Council has only agreed that the Central Board of Indirect Taxes and Customs (CBIC) will issue a circular clarifying the current taxation regime of popcorn.

‘Ready-to-eat popcorn’, which is mixed with salt and spices, and has the essential character of namkeens, currently attracts a 5% GST if it is not pre-packaged and labelled.

If it is supplied as pre-packaged and labelled, a 12% GST is levied.

However, when popcorn is mixed with sugar (caramel popcorn), its essential character changes to that of a sugar confectionary, and would therefore be classifiable under HS 1704 90 90 and attract an 18% GST, as per the clarification.