(MENAFN- Live Mint) As Finance Minister Nirmala Sitharaman's explanation on popcorn taxation went viral, congress leader Jairam Ramesh raised concerns over the "growing complexity of a system that was supposed to be a Good and Simple Tax."
In a post on X on Sunday, Ramesh said,“The absurdity of three different tax slabs for popcorn under GS , 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.”
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The Congress leader also asked whether Prime Minister Narendra Modi' s government will show the courage to launch a complete overhaul for instituting a GST 2.0. "With the Union Budget now just 40 days away, will the PM and FM summon the courage to launch a complete overhaul and institute a GST 2.0?" Ramesh asked.
Congress general secretary in-charge communications Jairam Rames also 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.
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“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.” Ramesh wrote.
He added,“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.”
The Congress leader said the recent data on tax frauds uncovered by the Directorate General of GST Intelligence (DGGI) reveal GST evasion of ₹2.01 lakh crore in FY24.
Meanwhile, the Kerala unit of the Congress mocked Sitharaman's "futile attempt to explain her way out of the GST rate mess using Popcorn example." The party posted, "She was trying to say that Caramel popcorn is sweet ; therefore, it is charged 18%."
"By that logic will she increase the tax on Sweet Pongal to 18% next?," the Congress Kerala said.
Taxation of popcorn
On Saturday, the GST Council agreed to issue a clarification on taxation of popcorn, saying that pre-packed and labelled ready-to-eat snacks will attract a 12 per cent tax while an 18 per cent GST will be levied if it is caramelised.
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There is no change in the tax rate of popcorn and the GST Council has only agreed that the Central Board of Indirect Taxes and Customs (CBIC) will issue a circular clarifying the current taxation regime of popcorn.
'Ready-to-eat popcorn', which is mixed with salt and spices, and has the essential character of namkeens currently attracts a 5 per cent GST if it is not pre-packaged and labelled.
If it is supplied as pre-packaged and labelled, a 12 per cent GST is levied.
However, when popcorn is mixed with sugar (caramel popcorn), its essential character changes to that of a sugar confectionary, and would therefore be classifiable under HS 1704 90 90 and attract an 18 per cent GST, as per the clarification.
Union Finance Minister Nirmala Sitharaman also broke silence on the popcorn GST controversy and said, "Salted, caramelised, plain popcorn is being sold as namkeen in certain states. Caramelised popcorn comes with added sugar, so the treatment of rate is different from namkeen."
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