No GST hike on popcorn, will still attract 5% tax in theatres when served in loose form: Sources

There has been no increase in goods and services tax (GST) rate on popcorns in the recently held GST Council meeting, and the announcement in the meeting was done to clarify the classification and GST rate applicable on popcorn mixed with salt and spices, according to people in the know.

A request was received from Uttar Pradesh to clarify the classification and GST rate applicable on popcorn mixed with salt and spices, which was taken to the Council, they added.

“The Council recommended issuance of clarification to facilitate resolution of classification disputes in the field on ready to eat popcorn that is mixed with salt and spices,” they added.

This also means that in theatres, popcorn will continue to be taxed at the existing rate of 5 percent when served in loose form, the people added.

“Generally, Popcorn is served to customers in theatres in loose form and hence will continue to attract rate of 5% as applicable to ‘restaurant service’ as long as supplied independent of the cinema exhibition service,” they added.

The comments come at a time when the GST Council's announcement on December 21 regarding different tax rates on popcorn added to the confusion of exhibitors. GST Council said that ready-to-eat popcorn which is pre-packed and labelled mixed with salt & spices will attract 12 percent tax while caramelised popcorn will attract 18 percent tax.

While top multiplex chains like PVR Inox and Miraj Cinemas have clarified no change in tax slabs for any popcorn, including caramel, sold in cinemas, single screen exhibitor Vishek Chauhan told Moneycontrol that caramel popcorn sold in theatres will attract 18 percent GST as against the earlier 5 percent GST.

Meanwhile, such varying rates on different types of popcorn are due to the Harmonised System (HS) classification, which is a multipurpose international goods nomenclature developed by the World Customs Organisation (WCO), the people cited above said.

"As per the HS classification, sugar confectionary falls under HS 1704 in Chapter 17. All sugar confectionary, other than few specified items, attract 18 percent GST. In India, namkeens are classified under HS 2106 90 99. Namkeens attract 5 percent GST when sold in other than pre-packaged and labelled form and 12 percent GST when sold in pre-packaged and labelled form," they added.