• India's new tax on popcorn based on sugar or spice content has sparked criticism and social media outrage.
• The Goods and Services Tax (GST) Council's new tax formula categorizes popcorn into three different tax slabs.
• Critics argue that the decision adds unnecessary complexity to the tax system and inconveniences citizens.
• Supporters defend the decision, stating that it is a normal practice for finished products with the same basic ingredients to attract different GST rates.

India's recent decision to tax popcorn based on its sugar or spice content has sparked a wave of criticism and social media outrage. The Goods and Services Tax (GST) Council, led by Finance Minister Nirmala Sitharaman and including state representatives, announced the new tax structure on December 21, 2024. The decision has been met with widespread disapproval, with opposition politicians, economists, and even supporters of Prime Minister Narendra Modi's government criticizing the move.

The GST Council's new tax formula categorizes popcorn into three different tax slabs. Non-branded popcorn mixed with salt and spices will attract a 5% GST, pre-packaged and branded popcorn will be taxed at 12%, and caramel popcorn, categorized as a sugar confectionery, will be taxed at 18%. The differential rates were implemented immediately, putting an end to the confusion over rates as popcorn was previously taxed differently across states.

Finance Minister Nirmala Sitharaman explained the rationale behind the decision to tax caramel popcorn at 18%, stating that any product with added sugar is taxed differently. However, this explanation did not quell the social media storm that erupted on December 22, 2024. Memes and jokes flooded the internet, poking fun at the decision.

Economic Advisers and Opposition Criticize the Move

The criticism was not limited to social media users. Two former government economic advisers questioned the tax system introduced in 2017. K V Subramanian, India's previous Chief Economic Adviser, expressed his disapproval on a post on X. He criticized the complexity of the decision, stating that it would contribute minimally to tax revenues but inconvenience citizens. His predecessor, Arvind Subramanian, echoed his sentiments, stating that instead of moving towards simplicity, the tax system was veering towards greater complexity, difficulty of enforcement, and irrationality.

The opposition also voiced their concerns. Jairam Ramesh, leader and spokesman of the main opposition Congress party, highlighted the absurdity of three different tax slabs for popcorn under GST. He stated that this only brought to light a deeper issue - the growing complexity of a system that was supposed to be a Good and Simple Tax.

The finance ministry spokesperson and the GST Council Secretariat did not respond to requests for comment on the controversy. Gopal Krishna Agarwal, the ruling Bharatiya Janata Party's spokesman on economic affairs, defended the GST Council's decision. He stated that the clarification on how popcorn is to be taxed was in response to a specific query on the issue.

GST System's Past Controversies

He added that it is normal for finished products with the same basic ingredients to attract different GST rates. He also praised the GST system, stating that it has become a very efficient and effective ecosystem for enhanced and transparent tax compliance through a corruption-free and smooth process.

However, this is not the first time the GST system has faced controversy for its tax classifications. In the past, there have been disputes over taxing chapatis or unleavened Indian flatbread differently from layered flatbreads, different rates for curd and yogurt, and cream bun versus bun and cream served separately. These controversies, although not on the same scale as the popcorn tax, have raised questions about the GST system's complexity and rationality.