The Goods and Services Tax (GST) Council meeting appears to have ended up as a no-event without taking any major decision. The council deferred decisions on health insurance, term insurance, rate rationalisation, delivery charges on quick commerce, calamity cess and floor space index. Among the decisions that the council took, tax on popcorn emerged as symptomatic of its thought process.
While on one hand the government advocates rationalisation of tax slabs, on the other, it proposed three different rates for popcorn based on its taste and packaging. In the belief that caramel popcorn is available mostly in high-end malls or theatres, the council levied 18 per cent GST on it. Pre-packed and labelled salted and spicy, ready-to-eat popcorn will attract 12 per cent GST, while the same product, when it is unlabelled and unpackaged, will attract five per cent of tax.
These tax slabs were fixed based on a presumption that caramel popcorn is consumed mostly by the affluent class, who could afford to pay a little extra tax. However, this assumption is faulty because it is based on the belief that less affluent people don't consume caramel popcorn. No decision on exempting health insurance premium from GST was taken yet.
However, it appears that the exemption could be allowed only for health insurance policies with an insurance cover of Rs 5 lakh, with the policies beyond Rs 5 lakh attracting the tax as usual. This approach goes against the state purpose of GST rollout, which is a si.
