GST on popcorn: The ‘salted vs caramel’ debate is finally put to rest with new GST rates

Under GST 2.0, all sugar confectionary items will attract GST at 5%, down from 18%. Hence, caramel popcorn will be taxed at 5%, according to the list of goods under new GST rates. Salted popcorn will also attract 5% GST.

A popcorn controversy since GST 1.0

When India’s Goods and Services Tax was first introduced on 1 July, popcorn—being a processed food item—was placed under different tax slabs, depending on how it was sold. While branded and packaged popcorn attracted 12% GST, loose popcorn was exempt altogether.

That dual structure was confusing to both small vendors and multiplexes.

In 2018, multiplexes, which sold popcorn at high mark-ups, argued that the snack sold in cinema halls should be treated as restaurant service (5% GST) and not as a packaged commodity (12% GST).

A year later, the GST Council defined popcorn as snacks: popcorn sold in a cinema or restaurant-style counter would attract 5% GST while branded popcorn would be taxed at 12%. This demarcation was challenged in courts over the next couple of years.

In 2022, the Multiplex Association of India lobbied for uniform treatment, citing that popcorn is “freshly prepared” and not comparable to FMCG.

GST Rationalisation

The “GST on popcorn” controversy popped up once again when the GST Council first started discussion rationalisation in 2023. Popcorn, and other snacks like namkeen, chips and roasted corn, were flagged since they were taxed under multiple slabs.

In 2024, when snacks at the multiplex started costing a bomb, the debate resurfaced on whether cinema popcorn is a luxury food or a basic snack. The government’s solution—tax it according to flavour.

(Editor’s note: The Central Board of Indirect Taxes & Customs has clarified that all popcorn will attract GST at 5 per cent, whether loose, packaged, salter or caramel, denying reports that earlier said caramel popcorn will be taxed 18% GST. The article has been updated to reflect the same)