New Delhi: Congress has criticised the government for the growing complexity of the GST system and said differing tax rates on popcorn has sparked confusion. It has called for a comprehensive overhaul to address ‘widespread evasion and fraud’.
The Congress has fiercely reacted to Union Finance Minister Nirmala Sitharaman’s remarks on the different tax slabs for popcorn under the Goods and Services Tax (GST), calling it an example of “absurdity” and “complexity”.
The principal Opposition party lashed out at the government’s handling of the tax system and coming up with three different tax slabs for popcorn under GST.
Congress General Secretary Jairam Ramesh took to his ‘X’ account and wrote, “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.”
The issue exploded on social media as Sitharaman’s explanation of the GST rates triggered a flood of memes and mockery.
The controversy erupted after the 55th GST Council meeting in Jaisalmer, Rajasthan, which was led by Sitharaman. Key decisions were made, during the meeting, on various goods and services – including the tax slabs for popcorn. Caramelised popcorn, according to the finance minister, would now attract an 18% GST due to its transformation into a sugar confectionery when mixed with sugar.
“When popcorn is mixed with sugar (caramel popcorn), its essential character changes to that of a sugar confectionery, and would therefore attract 18 percent GST,” Sitharaman explained.
She noted that salted and plain popcorn, if supplied unpackaged and unlabeled, would be taxed at 5%, while pre-packed and labeled popcorn would incur a 12% GST.
She also mentioned that in certain states, salted and caramelised popcorn is sold as “namkeen”, and hence, its treatment for tax purposes differs.
Sitharaman’s clarifications did little to quiet the growing backlash from the Opposition. The Congress continues to argue that the existing GST framework is riddled with flaws. It has led to widespread tax evasion and fraud. The party’s leadership has seized the opportunity to demand comprehensive reform and pushed for a GST 2.0 that could simplify the tax regime and ensure better enforcement.
In addition to popcorn, the GST Council made several other decisions such as slashing the tax on fortified rice kernels from 18% to 5% and imposing an 18% tax on used electric vehicles sold by businesses based on their margin value. Gene therapy was exempted from GST, while black pepper and raisins supplied by farmers also received an exemption.
The Council, however, deferred decisions on the tax rates for life and health insurance premiums and food delivery apps.
Jairam Ramesh did not stop at popcorn. Painting a grim picture of the state of the entire GST system, he claimed, “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.”
He added, “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 only 40 days away, Ramesh asked, “Will the PM and FM summon the courage to launch a complete overhaul and institute a GST 2.0?”
