Business

IIE DIGITAL DESK : The GST Council on September 4, 2025 brought long-awaited clarity to the taxation of one of India’s most ubiquitous snacks, ruling that salted popcorn — whether sold loose at counters or pre-packaged and labelled — will be taxed at 5 percent, while caramel popcorn will attract 18 percent GST as a sugar confectionery. The decision, released as part of the government’s updated tariff list under the GST 2.0 exercise, resolves a patchwork of rules that had left street vendors, multiplex operators and branded manufacturers operating under different tax burdens for essentially the same product. 

Since the introduction of GST in July 2017, popcorn had been treated inconsistently: freshly prepared or cinema-counter sales were often taxed like restaurant services, while branded, packaged varieties were placed in higher slabs. That dual treatment sparked repeated disputes and litigation, with multiplex associations arguing that popcorn sold at cinema counters is freshly prepared and should not bear the higher packaged-goods rate. The Council’s latest move abandons the packaging-based distinction for salted varieties and ties the rate to the product’s “essential character” — seasoning with salt or spices keeps it within the lower, 5 percent bracket, whereas coating with sugar elevates it to the confectionery category at 18 percent. 

The practical impact is immediate and visible across the supply chain. Small roadside sellers and unbranded stalls, which earlier faced either exemption or lower rates when selling loose popcorn, now find themselves on a uniform footing with branded players for salted varieties, simplifying compliance and invoicing. Cinemas and food-service counters that had long pressed for parity with restaurant GST treatment are likely to welcome the uniform 5 percent levy on salted popcorn, while manufacturers of sweet-coated and caramel products must continue to account for the higher rate. Industry observers say the clarification should reduce disputes and litigation, though it will also cement a price differential between sweet and salted offerings that could influence product portfolios and pricing strategies. 

From a consumer perspective, the tax shift may or may not change retail prices significantly; margins and pricing behavior of sellers will determine how much of the tax differential is passed on. For the exchequer, the move represents part of a broader GST rationalisation drive that has targeted snacks, namkeen and processed foods — items that were previously scattered across multiple slabs. The Council’s approach of using the product’s essential character as a guiding principle is intended to make classification more objective and administrable. 

By aligning tax treatment with product composition rather than packaging or point of sale, the GST Council has attempted to end a years-long debate that had left stakeholders seeking legal and regulatory certainty. The new rates were published as part of the government’s consolidated list of items under GST 2.0 on September 4, 2025.