'Absurd': Congress slams Modi government over different tax slabs for popcorn

The Congress on Sunday slammed the Narendra Modi government over the "absurdity" of three different GST slabs for popcorn, and underlined the growing complexity of the system that was promised to be a simpler tax regime.

The opposition party, that had boycotted the inauguration of the Goods and Services Tax (GST) regime in 2017, also mentioned how the loopholes in a flawed GST system are being exploited for massive tax evasion.

In a social media post on Sunday, Congress general secretary Jairam Ramesh said that GST evasion is significant, input tax credit fraud is common and the number of bogus companies set up to game the GST system runs into thousands.

"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," he said in a post on X.

"GST evasion is significant, input tax credit fraud is common, and the number of bogus companies set up to 'game' the GST system runs into thousands.

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

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

"With the Union Budget now just 40 days away, will the PM and FM summon the courage to launch a complete overhaul and institute a GST 2.0?" Ramesh asked.

The GST Council in its meeting on 21 December agreed to issue a clarification on taxation of popcorn, saying that pre-packed and labelled ready-to-eat snacks will attract a 12 per cent tax while an 18 per cent 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 per cent GST if it is not pre-packaged and labelled.

If it is supplied as pre-packaged and labelled, a 12 per cent 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 per cent GST, as per the clarification.