GST on Popcorn

Popcorn, loved by moviegoers and snack lovers alike, is not just a tasty treat, as it also comes with its share of Goods and Services Tax (GST). Depending on how and where it’s sold, popcorn attracts different GST rates in India. Whether you buy it from a supermarket or a multiplex, understanding the applicable GST can help businesses and consumers stay tax-compliant. This blog will provide you with detailed information about GST on popcorn.

GST Rates on Popcorn

Popcorn is one of the most popular snacks enjoyed by people of all ages, whether it's at movie theatres, shopping malls, fairs, or even roadside stalls. The GST on popcorn depends largely on how it is sold, whether it is branded, packaged, or flavoured. Here are the current GST rates applicable to different types of popcorn:

• 5% GST: Loose, Unbranded Popcorn

If you buy loose, unbranded popcorn from a small shop, local vendor, or street-side stall without any packaging or branding, it falls under the 5% GST category. This lower rate helps keep essential and unbranded food items affordable for the general public. For example, popcorn is sold by weight in local markets or roadside carts.

• 12% GST: Branded or Packaged Popcorn with Flavours

Popcorn that is branded, pre-packaged and sealed, or flavoured with butter, cheese, or other savoury additives, falls under the 12% GST rate. This is common for popcorn sold in multiplexes, retail stores, or by popular food brands. The added flavour and packaging classify it as a value-added product, attracting a higher tax. For example, butter popcorn or cheese popcorn is sold in sealed packets or at cinemas.

• 18% GST: Premium, Ready-to-Eat Popcorn (Sweet Varieties)

Popcorn that is fully coated or caramelised and classified as sugar confectionery is now taxed at the 18% GST rate. This includes varieties like caramel popcorn or other premium sweet-coated versions. This classification aligns with the tax rates on other confectionery items in India. For example, caramel popcorn or chocolate-coated popcorn is sold in premium stores.

Why Different GST Rates?

The Indian government applies different GST rates to:

• Keep unbranded, essential food items affordable.
• Apply higher taxes to processed, packaged, or luxury snack items.

This structure ensures fairness in taxation while promoting affordability for basic food choices.

GST Classification of Popcorn

Popcorn is a favourite snack across India, enjoyed everywhere from movie theatres to street corners. But when it comes to Goods and Services Tax (GST), not all popcorn is treated the same. The GST classification of popcorn depends on how it is processed, packaged, and sold. This classification follows the Harmonised System of Nomenclature (HSN) codes, which group goods into categories for tax purposes. Here’s a simple breakdown to help you understand how popcorn is classified under GST:

HSN Code 1005 / 1104: Raw Corn or Maize (No GST)

• This category includes raw corn or maize grains in their natural form.
• Since raw corn is considered an agricultural product, it is exempt from GST.
• This exemption helps protect farmers and promotes the affordability of unprocessed agricultural goods.

Example: Raw corn kernels bought in bulk from grain markets.

HSN Code 2106: Processed, Ready-to-Eat Popcorn (12% GST)

• This code covers ready-to-eat popcorn that is processed but not sweetened.
• Popcorn that is salted, buttered, or flavoured with savoury spices falls under this category.
• These products attract a 12% GST rate because they are considered prepared foods but not luxury items.

Example: Butter popcorn, cheese popcorn, or salted popcorn sold in cinemas, retail stores, or pre-packed pouches. This is the most common GST classification for branded savoury popcorn.

HSN Code 1704: Caramel & Sugar-Coated Popcorn (18% GST)

As per CBIC Circular No. 247/04/2025-GST, popcorn that is coated with sugar, caramel, or other sweet toppings falls under HSN 1704, which is the classification for sugar confectionery.

This includes popcorn coated with:

• Caramel
• Chocolate
• Candy-like syrups

These items attract a higher 18% GST rate because they are treated as luxury snack foods or confectionery rather than essential food items. For example, caramel popcorn is sold at multiplexes or gourmet snack stores.

GST on Popcorn Sold in Different Locations

Popcorn is a beloved snack enjoyed in cinemas, malls, fairs, and street corners across India. But when it comes to Goods and Services Tax (GST), not all popcorn is treated the same. The GST rate on popcorn depends less on where it is sold and more on how it is processed, packaged, and presented to consumers. Here’s an easy-to-understand breakdown of how GST applies to popcorn in different selling scenarios:

1. Popcorn Sold in Theatres, Multiplexes, and Malls (12% or 18% GST)

When you buy popcorn in cinemas, multiplexes, shopping malls, or branded outlets, you are likely purchasing:

• Branded, pre-packaged popcorn
• Flavoured versions like salted, buttered, cheese, or spicy popcorn

These savoury varieties of popcorn fall under HSN Code 2106 and attract a 12% GST rate.

However, if you choose sweet popcorn varieties like:

• Caramel popcorn
• Chocolate-coated popcorn
• Any sugar-based flavoured popcorn

These fall under HSN Code 1704 (Sugar Confectionery) and attract a higher 18% GST rate. So, the key deciding factor here is whether the popcorn is savoury or sweet and how it’s processed, not just the venue.

2. Popcorn Sold by Street Vendors or Local Shops (5% GST)

If you buy loose, unpackaged, unbranded popcorn from:

• Roadside vendors
• Small local shops
• Traditional markets

This type of popcorn generally attracts only 5% GST. The lower tax rate applies because:

• The product is unbranded.
• It is sold without sophisticated packaging or added value.
• It’s often considered a basic or essential food item.

This makes popcorn affordable for everyday consumers, especially in smaller towns and rural areas.

Input Tax Credit (ITC) on Popcorn

Running a popcorn business—whether in multiplexes, malls, or local shops—involves various costs like raw materials, packaging, transportation, and equipment. One important benefit available to many popcorn businesses under India’s Goods and Services Tax (GST) system is the Input Tax Credit (ITC). Understanding how ITC applies to different types of popcorn products can help businesses save money and improve profitability.

What is Input Tax Credit (ITC)?

Input Tax Credit (ITC) allows businesses to reduce their GST liability by claiming a credit for the GST paid on business-related purchases and expenses. In simple words, if you are paying GST on raw materials, packaging, or services needed to run your popcorn business, you can offset that against the GST you collect from your customers. This reduces your overall tax burden and helps maintain better cost efficiency.

ITC for Popcorn Businesses Selling Branded, Packaged, or Flavoured Popcorn (12% or 18% GST)

If your popcorn business sells:

• Branded or packaged popcorn

• Flavoured varieties like butter, cheese, or caramel

You fall under the 12% or 18% GST category, depending on the product. The good news is that you can claim ITC on all eligible expenses, including:

• Raw corn and ingredients
• Packaging materials (bags, boxes, labels)
• Transport and logistics services
• Machinery and equipment used in manufacturing or processing
• A cinema selling branded butter popcorn at 12% GST can claim ITC on the cost of ingredients, packaging, and transport.
• For caramel-coated popcorn, which is taxed at 18%, the business can also claim ITC on similar inputs.

This helps businesses reduce costs and remain competitive without passing unnecessary tax burdens onto customers.

No ITC for Businesses Selling Loose or Unbranded Popcorn (5% GST)

• If you sell loose, unpackaged, or unbranded popcorn (like street vendors or small shops), the applicable GST is only 5%.

• However, under the GST law sellers in this category cannot claim ITC on their input costs.
• This means that while the GST rate is lower, the inability to claim input tax credits could impact the overall profitability, especially for businesses with significant input costs.

Should Popcorn Businesses Opt for Higher GST Rates?

Businesses should carefully evaluate their pricing and tax strategies:

• If input costs are high (due to premium packaging, flavours, or logistics), opting for the 12% or 18% category may be better because ITC reduces your effective tax burden.
• For small-scale sellers with minimal costs, the 5% slab without ITC might still make financial sense.

GST Exemptions and Special Cases on Popcorn

Some popcorn products and sellers qualify for exemptions or special GST conditions that can help them stay affordable and competitive. Here are the GST exemptions and special conditions that apply to popcorn in India:

1. Raw Corn and Maize: Fully GST Exempt

Popcorn starts from raw corn or maize, which is an agricultural product. Since India’s GST law aims to protect farmers and agricultural businesses:

• Raw corn and maize are completely exempt from GST.
• This helps keep the cost of raw materials low for farmers and small manufacturers.

If you are purchasing raw corn directly from farmers or wholesale markets, no GST is applicable.

2. Homemade or Loose, Unbranded Popcorn: 5% GST

Popcorn that is homemade, sold loose or unpackaged, and unbranded, falls under the 5% GST category. This is typically seen in:

• Roadside stalls
• Small sweet shops
• Local grocery vendors

This lower tax rate is designed to keep snacks affordable for the masses and to support micro and small-scale businesses. For example, buying freshly popped corn from a local vendor in paper cones attracts only 5% GST.

3. Composition Scheme for Small Popcorn Sellers

For small-scale popcorn sellers with limited annual turnover, the GST Composition Scheme is a useful option. Here is how it works:

• Available to businesses with turnover up to ?1.5 crore (limits may vary by state).
• Businesses pay GST at a fixed, lower rate on turnover without complicated tax calculations.
• They are not required to maintain detailed GST records or file monthly returns.

However, sellers under this scheme cannot claim Input Tax Credit (ITC) on their business purchases. This scheme is especially beneficial for:

• Homemade popcorn sellers
• Small shops and micro food businesses
• Seasonal or part-time popcorn vendors

GST Council Clarifications on Popcorn

The Goods and Services Tax (GST) on popcorn in India has seen many questions and debates, especially regarding flavoured and coated varieties like caramel popcorn. To clear this confusion, the Central Board of Indirect Taxes and Customs (CBIC) issued an important clarification through Circular No. 247/04/2025-GST.

This circular provides clear guidelines on how different types of popcorn are taxed under GST, helping businesses and sellers apply the correct tax rates and stay compliant.

What Does the CBIC Circular Say?

The CBIC’s Circular No. 247/04/2025-GST clearly outlines how ready-to-eat popcorn, particularly flavoured and coated varieties, should be classified for tax purposes:

• Regularly flavoured popcorn (such as buttered, salted, or cheese popcorn) is not classified as confectionery. This type of popcorn continues to fall under a lower GST slab.
• However, popcorn that is fully coated with sugar-based syrups—for example, caramel popcorn, chocolate popcorn, or other sweet-coated varieties—is now officially classified as “sugar confectionery”.

These sweet-coated popcorn products fall under HSN Code 1704, the same code that covers other confectionery items like toffees, chocolates, and candies. This means caramel popcorn and similar products are taxed at 18% GST, regardless of where they are sold.

Why Was This Clarification Needed?

Before this circular, many businesses were unsure about how to classify sweetened popcorn like caramel popcorn. Some were applying a lower GST rate of 12%, treating it as ordinary flavoured popcorn, while others followed an 18% rate, considering it as confectionery.

This led to inconsistencies, confusion, and even the risk of non-compliance with GST laws. The CBIC’s clarification ensures that:

• Businesses across India follow uniform tax practices.
• The GST is applied based on the product’s nature and processing, not the place of sale.

Why This Matters for Businesses?

Understanding these GST classifications is crucial for:

• Correct pricing of products.

Claiming Input Tax Credit (ITC) appropriately.

• Avoiding GST penalties or disputes during audits.

Businesses that sell different varieties of popcorn should carefully check the composition and packaging of their products to apply the right GST rate.

Popcorn may seem like a simple snack, but when it comes to GST in India, the rules are clear and must be followed. From street-side vendors to cinema chains, understanding the correct GST classification ensures smooth business operations, proper pricing, and tax compliance. Staying updated with CBIC guidelines helps businesses avoid penalties while offering delicious popcorn to customers at fair prices. This article provided you with detailed information about GST on popcorn. To get assistance and support in filing a GST registration from professional experts, contact Online Legal India.