Is It Fair To Tax Popcorn?

Salted vs. caramelized popcorn – Why are they taxed at different rates? From snacks to more complex dishes, should food be taxed on the basis of ingredients and preparation rather than be categorised as a luxury item?

The GST Divide: Salted vs Caramelized Popcorn

At first glance, the taxation on popcorn might seem like a trivial matter. However, when you dig deeper, you’ll realize it speaks to a bigger issue about how food is categorized and taxed in India.

1. Salted Popcorn – This popcorn, the one you typically get at movie theatres or even local snack stores, is taxed at 5% GST. It’s considered a basic snack with minimal processing just a bit of salt or spices mixed in.

2. Caramelized Popcorn – The sweet, sticky caramel popcorn, on the other hand, has a higher 18% GST. This higher tax rate is because it involves more complex preparation and additional ingredients like sugar and caramel, transforming it into something that resembles a confectionery, not just a snack.

Why the Difference?

This difference in tax rates is due to the way the GST Council classifies foods. In simple terms, salted popcorn is viewed as a basic snack, while caramelized popcorn, with its extra ingredients and processing, is treated like a luxury item or confectionery.

The Paradox: Food as Essential vs. Luxury

India’s tax system tries to treat essential foods like grains, pulses, and vegetables with lower tax rates, while "luxury" or more processed foods are taxed higher. The logic is that basic needs should be affordable to everyone, while more indulgent items should bear a heavier tax burden.

But the question is: Should all food products be taxed this way?

Take bread for example—plain bread is tax-free, but add some sugar or chocolate, and suddenly, it attracts a higher tax. Similarly, rice is minimally taxed, but turn it into biryani, and the tax goes up. Popcorn follows this same logic: Salted popcorn is a simple snack, but add sugar to create caramel popcorn, and the tax escalates.

This raises an interesting point: Why treat certain foods like caramelized popcorn as "luxury" based solely on sweetness or processing level?

Caramel popcorn will fall under the HS code 1704 90 90, which is part of the global Harmonised System (HS) classification. It is a multipurpose international goods nomenclature developed by the World Customs Organisation (WCO).