On December 21, 2024, the Goods and Services Tax (GST) Council, chaired by the Finance Minister Nirmala Sitharaman and including State representatives, brought some changes to GST on certain items. It was a regular affair and it was decision of the entire GST council including of the representative of states ruled by the opposition parties. After the meeting, social media and news media spread information and misinformation stating that changes have been brought in relation to the sale of popcorns and old cars. The negative campaigns, relying on falsehoods, especially targeted India’s finance Minister, Nirmala Sitharaman for the GST Council’s decision.
Here in this article, we will try to bring the real issues and questions that are in people’s minds related to these new taxes in order to clear the cloud of misinformation.
Q1. Has the GST on popcorn gone up?
Ans: No, the GST rate on popcorn has not increased. In the recent GST Council meeting, the State of Uttar Pradesh asked for clarification on the GST rate for popcorn mixed with salt and spices. The issue was discussed during the 55th GST Council meeting, and the Council decided to provide clarity on this matter.
Q2. Why do different types of popcorn have different GST rates?
Ans: GST rates for goods, including food items, are based on the Harmonised System (HS) classification. This is an international system developed by the World Customs Organisation (WCO). It is used by over 200 countries and covers 98% of global trade. The variation in GST rates arises from the classification of the product under different categories in the HS system.
For instance, sugar confectionery, such as sweets, falls under HS code 1704 in Chapter 17 and generally attracts 18% GST. On the other hand, nankeens (savoury snacks) are classified under HS code 2106 90 99 and attract 5% GST when sold loose (not pre-packaged or labelled) and 12% GST when sold in pre-packaged and labelled forms. The differences in GST rates are a result of these classifications.
Q3. What was the purpose of issuing the clarification?
Ans: Clarification was issued regarding the recommendation of the GST Council to resolve classification disputes related to ready-to-eat popcorn mixed with salt and spices. The objective was to provide clear guidance and address any confusion in this regard.
Q4. Will the sale of popcorn become more expensive in theatres?
Ans: Popcorn sold in theatres is typically served in loose form and will continue to attract a 5% GST rate, similar to the rate applicable to ‘restaurant service,’ as long as it is supplied separately from the cinema exhibition service.
Q5. Is GST applicable when selling a second-hand car at a loss?
Ans: No, GST is applicable only to the profit earned from selling a second-hand car.
Q6. Is GST applicable if an individual sells a car to another individual?
Ans: No, GST is not applicable when an individual sells a car to another individual. It is applicable only if a car dealer is involved in the transaction.
Q7. If a car dealer buys a vehicle from Person A for ₹6 lakhs, spends ₹1 lakh on repairs, and sells it to Person B for ₹9 lakh, will GST apply to the profit of ₹3 lahks or ₹2 lakh?
Ans: GST will be applicable only on the profit of ₹2 lakhs because the total cost of the car, including repairs, will be considered ₹7 lakhs.
