Recently, updates have been coming in related to GST on Popcorn and Used Cars in India which has generated a lot of debate and clarification regarding tax rates applicable to these day-to-day items. So this post is going to cover the details of Goods and Services Tax (GST) as it applies to popcorn sold in theaters and used cars with some ancillary business processes like Company, Trademark, and GST Registration.
GST on Popcorn
Existing Tax Rates
Till December 2024, the GST Council has ensured that loose popcorn being sold in cinema halls shall remain eligible for a GST rate of 5%, the same as for restaurants. Yet, if a bundle with a cinema ticket is offered, it gets considered a composite supply with GST determined on account of the primary supply in question – a cinema ticket itself.
For ready-to-eat popcorn with salt and spices, the tax will be 5% if it is not pre-packed or labeled. On the other hand, if the popcorn is pre-packed, it will attract a 12% GST. In this case, caramel popcorn, which contains sugar, will attract a different tax rate of 18% since it is classified as a sugar confectionery.
Tax Classification Consequences
This differentiation in tax rates has caused frustration and outcry from different sources. The experts argue that the differential rates will make an implementation issue and lead people to disagree on classification; the clarification of the council is an effort to correct these issues but has started the debate again on general complexity in India’s system of GST.
Consumer Impact
This has been greeted by customers who are regular moviegoers, as the Government did not hike the GST for popcorn. On the contrary, a new system, whereby various preparation methods can be taxed at different levels, could increase the rates of pre-packaged sugary popcorn.
GST on second-hand cars
Tax Structure Summary
Recently, the taxation of old cars has also seen some major changes. Before the latest GST Council meeting, used vehicles were taxed at different rates depending on their specifications:
- 18% GST for old petrol or CNG vehicles with engine capacities over 1200 cc.
- 12% GST for other old vehicles not meeting these criteria.
- 12% GST for old electric vehicles.
The government plans to reduce the tax rate on used cars to 5% for specific conditions. Among these are transactions that incur a selling price below that of its purchase. This shall help improve the sales level in the market for used cars by helping consumers and fulfilling all tax conditions.
Margin Scheme Used Cars
Under the new norms, if a dealer sells a second-hand car for over and above its purchase price after refurbishment, GST would be levied only on the margin difference between the sale price and the purchase price plus refurbishment costs. For instance, if a dealer buys a car for ₹50,000 and sells it for ₹65,000 after spending ₹5,000 on refurbishing it, GST would be charged only on ₹10,000 (the profit margin) rather than the total sale price[7][8].
Business Issues
For businesses involved in used cars or popcorn sales, the tax implications are a significant aspect to be known to comply with the tax law and make the right financial planning. Correct GST Registration is required by businesses to manage their tax liabilities appropriately.
Associated Business Activities
Company Registration
Companies that sell goods, such as popcorn or used cars, have to register themselves as companies. The process of Company registration involves filing relevant documents and complying with local rules and regulations.
Trademark Registration
For brands selling unique products or services (like gourmet popcorn), securing a Trademark Registration can protect brand identity and prevent infringement.
ITR Filing
All businesses must comply with tax obligations through regular ITR Filing. This includes reporting income from sales of goods like popcorn or used cars accurately to avoid penalties.
Conclusion
Updates related to GST on Popcorn and Used Cars in India reflect that the government is continuously striving to simplify tax structures with consumer issues. While tax rates for selling popcorn loose haven’t changed, it would be more affordable, used cars would be cheaper and less burdensome in some conditions. As businesses grapple with these changes, knowledge of related processes, such as company registration and trademark protection, will be essential for success in this dynamic market.