Image used for representational purposes only. | Photo credit: BISWARANJAN ROUT
The Congress on Sunday (Dec 22, 2024) said the “absurdity” of three different tax slabs for popcorn under GST only exposes the growing complexity of the system and asked whether the Modi government will show the courage to to launch complete revision for instituting a GST 2.0.
Jairam Ramesh, Congress general secretary in charge of communications, also alleged that tax evasion is significant, input tax credit fraud is common and the number of fake companies set up to ‘game’ the GST system is in the thousands.
“The absurdity of three different tax brackets for popcorn under the GST, which has unleashed a tsunami of memes on social media, only highlights a deeper problem: the growing complexity of a system that should have been a good and simple tax, ” he said in a post on X.
“GST evasion is significant, input tax credit fraud is common, and the number of bogus companies set up to ‘game’ the GST system is in the thousands.”
“Supply chain tracking is weak, the registration process is flawed, revenue exemption loopholes are being taken advantage of, compliance requirements are still cumbersome and misclassification of goods is common,” Mr Ramesh said.
He said the recent tax fraud data uncovered by the Directorate General of GST Intelligence (DGGI) reveals a GST evasion of ₹2.01 lakh crore in FY24.
“With the Union Budget just 40 days away, will the Prime Minister and the FM muster the courage to launch a complete overhaul and introduce a GST 2.0?” asked Ramesh.
The GST Council on Saturday agreed to issue a clarification on the tax on popcorn, saying that pre-packed and labeled ready-to-eat snacks will attract a tax of 12%, while a tax of 18% will be levied when it is caramelized.
There is no change in the tax rate on 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 tax regime on popcorn.
‘Ready-to-eat popcorn’, mixed with salt and spices, which has the essential character of namkeens, currently attracts a 5% GST if it is not pre-packed and labelled.
If it comes pre-packed and labeled, 12% GST will be charged.
However, when popcorn is mixed with sugar (caramel popcorn), its essential character changes into that of a confectionery and could therefore, according to the clarification, be classified under HS 1704 90 90 and attract a VAT rate of 18%.
Published – Dec 22, 2024 6:01 PM IST
