During the 55th GST Council meeting held in Jaisalmer, Finance Minister Nirmala Sitharaman clarified that the tax differentiation is based on the ingredients and classification of the products. She explained that ready-to-eat popcorn mixed with salt and spices is categorized similarly to 'namkeens' and thus attracts a lower GST rate. However, when popcorn is coated with sugar to create caramel popcorn, it is classified as a sugar confectionery, warranting the higher 18% GST.
This clarification has been met with significant backlash from the public and commentators. Security analyst Sushant Sareen expressed his frustration on social media, stating, "India will always be a third-world country if we have a brainless bureaucracy and clueless politicians who penalize anything that remotely resembles upgrading products."
The decision has also sparked a wave of satire and memes online. Social media platforms are flooded with humorous takes on the tax disparity, with users questioning the rationale behind taxing different flavors of the same product at varying rates. One user quipped, "Pani puri khatta 5% GST. Pani puri meetha 18% GST," highlighting the perceived absurdity of the tax distinctions.
Critics argue that such tax policies could stifle innovation and product diversification in the food industry. They contend that higher taxes on value-added products like caramel popcorn may discourage businesses from introducing new flavors and varieties, ultimately limiting consumer choice.
On the other hand, proponents of the tax differentiation assert that it aligns with the GST framework's principle of taxing products based on their classification and value addition. They argue that sugar confectioneries generally attract higher GST rates, and caramel popcorn, falling into this category, should be no exception.