This has reference to Circular No. 247/04/2025-GST Dt. 14.02.2025 The Government has provided clarification regarding GST rate on Popcorn. The dept. received representations from industry stakeholders seeking clarification on the appropriate classification and applicable Goods and Services Tax (GST) rate on ready-to-eat popcorn. Given the varying ingredients and methods of preparation, there was ambiguity regarding its classification under the Harmonized System of Nomenclature (HSN code of popcorn) and the corresponding tax rate.
GST Council’s Recommendations and Classification
Based on the recommendation of the GST Council, it has been clarified that ready-to-eat popcorn mixed with salt and spices falls under HSN code 2106 90 99. This classification impacts the applicable GST rate based on packaging and labelling conditions:
- If you sell ready-to-eat popcorn mixed with salt and spices in a form other than pre-packaged and labelled, it attracts 5% GST. This classification follows S. No. 101A of Schedule I of Notification No. 1/2017-Central Tax (Rate) dated 28th June 2017.
- If you sell popcorn as pre-packaged and labelled, it attracts 12% GST as per S. No. 46 of Schedule II of the same notification. The rationale for this classification is that such popcorn has the essential characteristics of namkeens, which are taxed similarly.
GST on Sugar-Coated Popcorn
When you mix ready-to-eat popcorn with sugar, altering its character to that of a sugar confectionery (e.g., caramel popcorn), it falls under HSN code 1704 90 90. This category attracts 18% GST, as per S. No. 12 of Schedule III of Notification No. 1/2017-Central Tax (Rate) dated 28th June 2017.
Regularization of Past Transactions
Recognizing the genuine doubts prevailing in the industry regarding the GST rate applicability on ready-to-eat popcorn mixed with salt and spices, the GST Council has recommended regularizing the issue for the past period up to 14th February 2025 on an ‘as is where is’ basis. This move aims to provide relief to businesses that may have applied incorrect tax rates due to ambiguity.
Looking for HSN code for services, Check out here the HSN code list for various services under GST
Conclusion
The latest clarification by the GST Council provides much-needed clarity for businesses dealing in ready-to-eat popcorn. The classification based on packaging and sugar content ensures a structured approach to GST application, aligning with broader tax principles. Businesses should review their tax compliance strategies and ensure adherence to these clarifications to avoid potential disputes or penalties.
