With popcorn and cream buns lost in GST maze, experts look for logic

The humble tub of popcorn — split into three categories by the GST Council, one elite, one mundane, and one somewhere in between — has found itself in the middle of a heated online discussion.

The finance ministry’s attempt to “clarify” the GST structure for popcorn to resolve disputes has in fact put the spotlight strongly on the typical movie-goer’s snack.

The GST Council has decided that plain salted popcorn attracts only 5 per cent GST, while the pre-packaged and labelled variety is taxed at 12 per cent, and caramelised popcorn invites a hefty 18 per cent GST. Economists and industry experts argue that this complicated divide doesn’t add much to the government’s coffers but definitely adds to consumers’ confusion.

Also read: GST Council meeting | Sitharaman levies 5-18% tax on popcorn, exempts gene therapy

All for 0.013%

Former Chief Economic Advisor Krishnamurthy Subramanian has pointed out the math on his X handle.

“Estimated popcorn sales in 2025 (estimated from GlobalData) = ₹1700 cr; Assuming entire is at 18%, GST collection from popcorn = ₹300 cr; Total GST collection (estimated 2025) = ₹22,00,000 Cr; => Max revenue contribution of popcorn decision = 300/2200000 = 0.013%!” he has pointed out.

“What is the rationale for a decision that can max contribute 0.013% to revenue but inconvenience citizens?” Subramanian has gone on to ask, highlighting the need for administrative reforms. He has added that before making a decision, officials should necessarily ask its objective and use data to examine its quantitative impact.

Pai warns of “tax terrorism”

Before that, Subramanian shared Former Infosys CFO Mohandas Pai’s post with the comment, “Complexity is a bureaucrat’s delight and citizens’ nightmare.”

Pai, in his X post, called the new rates “silly and complex” and warned that they could lead to “tax terrorism”. He tagged Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman to highlight that “citizens are becoming victims of bad policy which will make them hostages to rent seeking officials and create disputes”. He added that GST needs to be simplified.

Arvind Subramanian, another former CFO, called the decision a “national tragedy violating the spirit of the Good & Simple Tax the GST was meant to be”.

“The folly is compounded because instead of at least moving in the direction of simplicity we are veering to greater complexity, difficulty of enforcement & just irrationality,” he added in his X post.

The cream bun case

Not only popcorn, the absurdity of the GST categorisation was also brought to the fore by Coimbatore hotelier D Srinivasan during a meeting with Sitharaman herself.

“Madam, a bun doesn’t attract GST, but when cream is applied to make it a cream bun, it attracts 12 per cent GST. Customers now say, ‘You bring the bun and cream separately, and I’ll make the cream bun’,” Srinivasan told the finance minister, drawing guffaws from the audience.

Also read: GST Council issues clarification on popcorn taxation

The president of Coimbatore District Hoteliers’ Association joked that even computers at hotels and eateries struggle to calculate the differing GST rates when a variety of items are ordered. He urged the minister to have a uniform rate for all food items at least.

Sitharaman later said at a press conference that all the necessary steps were being taken to ensure that GST was smooth and not a burden for the people. She sounded slightly miffed about Srinivasan’s quip and sparked rumours that Srinivasan had been forced to apologise as he met her again soon afterwards.