New GST rates: Is the puzzle over popcorn, paranthas and paneer finally solved?

The endless confusion over GST rates on items such as popcorn, parontha and paneer has ended with the Council approving a new structure on September 3. There had been repeated confusion over GST rates in the past. Rotis and packaged paranthas were placed in different slabs, loose paneer and packaged paneer were taxed differently, and even popcorns attracted separate rates depending on whether they were sold loose or packaged. But, not with rate rationalisation, the confusion has somewhat settled. The changes, which come into effect from September 22, streamline food tax rates and also fix higher levies on online gaming and IPL tickets.

Popcorn tax rate simplified

Under the new regime, popcorn mixed with salt and spice or even caramel will be taxed at 5 percent whether sold loose or pre-packed and labelled. Earlier, salted or spiced popcorn was taxed at 5 percent when sold loose and 12 percent when sold in packaged form. Caramel popcorn was charged 18 percent.

Parathan debate Settled:

Earlier, GST classifications had also triggered disputes over frozen paranthas. In a case, the Appellate Authority for Advance Ruling ruled that packaged paranthas requiring heating before consumption could not be treated the same as roti or chapati. While plain roti attracted 5 percent GST, paranthas were placed under the 18 percent slab, creating a sharp difference for consumers. Now this has been settled.

Under the revised rate structure, now "all Indian breads, by whatever name called have been exempted even though only few goods have been mentioned by way of illustrative example."

Paneer:

Confusion emerged over GST rates on paneer. The 47th GST Council meeting in July 2022 clarified that paneer sold loose (unbranded/unlabelled) remained exempt from GST, while pre-packaged and labeled paneer was brought under the 5% GST slab. Now, debate over paneer has also been settled.

Cream buns taxed at lower rate

A similar debate had emerged last year on cream buns, which were earlier taxed at 18 percent as pastries, even though buns and cream separately attracted only 5 percent. The Council has now brought pastries, including cream buns, into the 5 percent slab.

'Special GST Rates'
The Council has fixed a 40 percent GST rate for online money gaming, gambling, horse racing, casinos, lottery and IPL tickets.

“For all specified actionable claims including betting, casinos, gambling, horse racing, lottery and online money gaming, GST rate of 40% will apply. Admission to sporting events like IPL will attract 40% GST, however, this rate of 40% will not apply to admission to recognised sporting events.

Admission to other sporting events including recognised sporting events where the ticket price is not more than Rs. 500 continues to be exempt, and if the ticket price is more than Rs. 500, it continues to be taxed at the standard rate of 18%,” stated the government’s FAQ on the new GST structure.

GST New Rates:
The Council approved a dual rate system of 5 percent and 18 percent, scrapping the earlier 12 percent and 28 percent slabs. Certain bikes, cars and insurance policies will now attract lower rates.

The GST Council, chaired by Finance Minister Nirmala Sitharaman, has positioned these reforms as part of a wider rationalisation drive. The move is expected to reduce disputes, provide relief to consumers and improve tax collections.