GST on popcorn sparks debate over policy complexity and revenue impact
The GST Council’s recent decision to impose varying tax rates on different types of popcorn has ignited widespread criticism from economists, industry experts, and citizens alike. Former Chief Economic Advisor (CEA) Krishnamurthy Subramanian led the charge, questioning the rationale behind a move that contributes minimally to revenue while adding complexity for consumers.
Popcorn GST rates and revenue impact
On Saturday, the GST Council recommended the following tax rates for popcorn:
- 5% for salted popcorn,
- 12% for pre-packaged and labeled popcorn,
- 18% for caramelized popcorn.
Subramanian calculated that even with projected popcorn sales of Rs.1,700 crore in 2025 (as per GlobalData), the estimated revenue at an 18% GST rate would amount to Rs.300 crore—just 0.013% of the total GST collection, which is expected to reach Rs.22 lakh crore by 2025.
“What is the rationale for a decision that can max contribute 0.013% to revenue but inconvenience citizens?” Subramanian asked, urging policymakers to adopt more thoughtful, objective-driven approaches.
Why Administrative Reforms Covered in India@100 are essential
Estimated popcorn sales in 2025 (estimated from GlobalData) = ₹1700 cr
Assuming entire is at 18%, GST collection from popcorn = ₹300 cr
Total GST collection (estimated 2025) = ₹22,00,000 Cr
=> Max revenue… https://t.co/KSJOvlT6cc— Prof. Krishnamurthy V Subramanian (@SubramanianKri) December 22, 2024
Industry backlash and criticism
The decision has drawn sharp criticism, with many labeling the move overly complex and unnecessary:
- Mohandas Pai, Former Infosys CFO, slammed the rates as “silly and complex,” warning of “tax terrorism” and potential abuse by officials. “GST needs to be simplified, not this,” he tweeted, tagging Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman.
- Arvind Subramanian, Former CFO, called the decision a “national tragedy,” lamenting the deviation from GST’s intended simplicity. He said, “Instead of moving toward simplicity, we are veering into greater complexity and enforcement difficulties.”
- Sushant Sareen, a security analyst, criticized the decision as “brainless bureaucracy” and accused policymakers of penalizing consumers. He sarcastically suggested that flavored popcorn might next be classified as a “sin good” and taxed at even higher rates.
The Ministry’s Clarification
Amid the uproar, the finance ministry clarified that the recommendation was not a new tax imposition but a clarification to resolve disputes over varied interpretations of existing tax rates. “It is a clarification being recommended by the GST Council to settle disputes arising out of interpretation,” the ministry said.
Calls for simplification
The broader criticism points to a recurring theme: the need for GST reforms to reduce complexity and simplify taxation. Subramanian captured this sentiment succinctly, stating, “Complexity is a bureaucrat’s delight and citizens’ nightmare.”
As the controversy continues, the debate highlights the challenges of balancing revenue generation with policy simplicity and public convenience.
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Love Indian experts on bashing Finance Minister on every opportunity, ……all Indians are economic & financial experts. Time finance topics are lef to finance experts to comment / criticize. Do not loud mouth just because one has loud mouth