The Congress on Sunday said the “absurdity” of three different tax slabs for popcorn under GST only highlights the growing complexity of the system and asked whether the Modi government would demonstrate courage to launch a complete overhaul to institute a GST 2.0.

Congress general secretary on communications Jairam Ramesh also claimed that GST evasion is high, input tax credit evasion 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 sparked a tsunami of memes on social media, only highlights a deeper problem: the increasing complexity of a system that was supposed to be a simple and good tax.” he said in a post on X.

“GST evasion is high, input tax credit fraud is common and the number of fake companies set up to ‘game’ the GST system is in the thousands.

“Monitoring of supply chains is weak, the registration process is flawed, loopholes in turnover exemptions are exploited, compliance requirements are still burdensome and misclassification of goods is common,” a Ramesh said.

He said that recent data on tax evasions unearthed by the Directorate General of GST Intelligence (DGGI) reveals GST evasion of Rs 2.01 lakh crore in FY24.

“With the Union Budget just 40 days away, will the Prime Minister and Finance Minister have the courage to launch a complete overhaul and introduce GST 2.0?” » asked Ramesh.

The GST Council on Saturday agreed to issue a clarification on taxation of popcorn, saying pre-packaged and labeled ready-to-eat snacks will be subject to 12 per cent tax while 18 per cent GST will be levied if they are caramelized.

There is no change in the tax rate of 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 of popcorn corn.

“Ready-to-eat popcorn”, which is mixed with salt and spices and has the essential character of namkeens, is currently subject to 5 per cent GST if it is not pre-packaged and labelled.

If supplied pre-packaged and labeled, 12 percent GST is levied.

However, when popcorn is mixed with sugar (caramel popcorn), its essential character transforms into that of a sweet confectionery and would therefore be classified under HS number 1704 90 90 and would be subject to a GST of 18 percent, according to the clarification.