Rate disputes on specific category of popcorn till February 14 will be regularised, Central Board of Indirect Taxes & Customs (CBIC) has said. With the board has also come out with detailed circular on three tier structure for different types of popcorn.
“In view of the prevailing genuine doubts regarding the applicability of GST rate on ready to eat popcorn mixed with salt and spices, as recommended by the (GST) Council, issues for past period up to February 14, is hereby regularised on ‘as is where is’ basis,” a circular by CBIC said. Based on request from Uttar Pradesh, the council, in its meeting on December 21, 2024, decided to issue a circular.
Further, the circular clarified that that ready to eat popcorn which is mixed with salt and spices attracts 5 per cent GST if supplied loose. The rate is 12 per cent if ready to eat popcorn which is mixed with salt and spices is supplied as pre-packaged and labelled. “It has the essential character of namkeens,” the board sais while justifying 12 per cent rate. However, when popcorn is mixed with sugar and thus changing its character to sugar confectionary (eg caramel popcorn), it will attract 18 per cent GST.
No new imposition of any tax
CBIC has already clarified that there is no new imposition of any tax in this regard and is merely a clarification as certain field units were demanding different tax rates on the same. Therefore, it is a clarification being recommended by the GST Council to settle the disputes arising out of interpretation, the board said.
Earlier, experts said that consuming loose and salted popcorn in a movie theatre can attract GST up to 18 per cent. GST rate on popcorn bought together with movie tickets will be 12 per cent or 18 per cent based on the ticket price if the bundled supply satisfies the test of composite supply.
Later, government sources said that generally, popcorn is served to customers in theatres in loose form and hence will continue to attract rate of 5 per cent as applicable to ‘restaurant service’ as long as “supplied independent of the cinema exhibition service.” Application of the last section of the sentence can raise the GST to 12 or 18 per cent for loose and salted popcorn.
Many theatres, especially multiplexes, provide online ticket booking to their patrons. Online ticket purchase accompanies an option buying popcorn, snacks and beverages . Normally the offer comes with discount, making the whole deal attractive. Such a supply, from taxation point of view, could be ‘composite supply’ or even ‘mixed supply’. It may be noted that cinema ticket below ₹100 attracts GST at 12 per cent and above ₹100, attracts 18 per cent GST.