‘We decided to simplify food classification, now all popcorn attract 5% GST’: FM Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman on Friday said that goods and services tax (GST) on popcorn had sparked significant debate in the past, particularly in Uttar Pradesh.

"We were told about cases where vendors were selling sugar, caramelised popcorn at the same rate of salty popcorns. These cases were taken to the court, and due to the classification of popcorns, the cases were stuck in various courts. The UP government asked us why doesn't the GST Council clarify on this issue. In the latest GST Council meeting, we decided to simplify the classification. Under the new regime now, caramel, salted or spiced popcorn will uniformly attract 5% GST, regardless of whether it is sold loose or in packets," Sitharaman said.

The long-standing confusion over GST rates on items such as popcorn, paranthas, and paneer has been addressed with the Council under the new GST 2.0 structure on September 3. In the past, rotis and packaged paranthas were placed under different slabs, loose paneer and packaged paneer were taxed differently, and popcorns attracted separate rates depending on whether they were sold loose or packaged. With the latest rationalisation, much of this ambiguity has been resolved. Until now, popcorn fell under multiple slabs: loose salted varieties at 5%, packaged at 12%, and caramel at 18%. The new regime brings greater uniformity, with caramel, salted or spiced popcorn taxed at 5% regardless of whether it is sold loose or pre-packed.

Previous GST rates on Popcorn

The GST rate for popcorn varies depending on its form of sale, packaging, and flavoring.

5% GST: Applies to loose, unbranded popcorn sold without packaging or marketing.

12% GST: Applies to pre-packaged, branded, or flavored varieties such as butter and cheese popcorn.

18% GST: Applies to fully coated popcorn, such as caramel, which is classified as sugar confectionery under recent circulars.

Examples:

Popcorn sold unpackaged at roadside stalls or local shops is taxed at 5%.

Branded popcorn sold in sealed packets or served at venues like cinemas falls under the 12% slab.

Caramel-coated popcorn is taxed at 18%.

New rates

The GST Council has also simplified taxation on cream buns. Previously, they were taxed as pastries at 18%, while cream and buns separately attracted 5% each. Now, cream buns fall under the 5% slab.

The confusion over GST rates on paneer has now been resolved. At the 47th GST Council meeting in July 2022, it was clarified that loose, unbranded or unlabelled paneer would remain exempt from GST, while pre-packaged and labelled paneer would fall under the 5% slab. The debate on paneer taxation has since been settled. 

At the latest GST Council meeting on September 3, 2025, several dairy products, including paneer and UHT milk, received tax relief through major rate cuts and exemptions.

According to GST FAQs, all dairy milk except UHT milk was already exempt from GST. To align tax treatment across similar products, UHT milk has now been exempted as well. Plant-based milk drinks, other than soya milk, earlier attracted 18% GST, while soya milk drinks were taxed at 12%. Under the revised structure, the GST rate on both plant-based and soya milk drinks has been reduced to 5%.