India’s latest tax hikes have sparked widespread discussions among businesses and consumers alike. First up, the country’s $32 billion used car market is bracing for the shift. The GST Council approved an increase in the GST rate on used cars, including electric vehicles, from 12% to 18%. This hike applies to businesses involved in buying and selling used cars, impacting their profit margins. While individual buyers and sellers are not directly affected, businesses will need to absorb the increased tax or pass it on to consumers, potentially leading to higher prices for used cars.
Meanwhile, the council also increased the GST rate on caramel popcorn to 18%. The decision impacts popcorn sold in cinemas, where caramel popcorn constitutes around 10% of the total popcorn sales. The higher tax is expected to lead to a price increase of approximately 12%, impacting the cinema-goer costs.
This change in tax rates is primarily due to the reclassification of caramel popcorn as a sugar confectionery. While food and beverage sales contribute significantly to overall revenue, caramel popcorn constitutes a relatively small portion of total sales. However, the price increase may affect consumer demand for caramel popcorn.
The GST Council’s decision to impose different tax rates on different types of popcorn has drawn criticism from experts. Former CEA Krishna Moorthy Suban pointed out that the revenue gained from the higher tax on caramel popcorn is minimal, estimated at only 0.013% of the total GST collections. Former Infosys CEO Mohandas Pai has also questioned the rationale behind the complex tax structure and its potential impact on consumers and the industry.
By
