GST on Popcorn & Movie Tickets: What You Need to Know

Did you know ordering popcorn along with your movie ticket online can attract GST rates between 12% and 18%? Let’s break down the latest GST Council clarifications and how they apply to bundled supplies like tickets and snacks.

Key Highlights of GST on Popcorn

  1. Loose Popcorn at Theatres:
    • Ready-to-eat popcorn mixed with salt and spices, when sold loose, attracts a 5% GST as it falls under “restaurant service”.
    • However, if bundled with cinema exhibition services, the rate may increase to 12% or 18%.
  2. Pre-Packaged and Labelled Popcorn:
    • Attracts a 12% GST rate.
  3. Caramel Popcorn:
    • Considered a premium product, caramel popcorn falls under the 18% GST slab.

GST Implications for Bundled Supplies

Many multiplexes offer an online option to purchase tickets with snacks and beverages, often at discounted prices. From a taxation perspective, such a supply can either be a composite supply or a mixed supply, each with distinct GST implications.

Composite Supply:

  • Definition: Two or more supplies that are naturally bundled and sold together in the ordinary course of business.
  • Tax Rate Application: The GST rate of the principal supply is applied to the entire value. For instance:
    • If popcorn is bundled with a movie ticket priced below ₹100, the GST rate would be 12%.
    • If the ticket price exceeds ₹100, the rate increases to 18%.

Mixed Supply:

  • Definition: Independent supplies bundled together for a single price, but not naturally bundled.
  • Tax Rate Application: The highest GST rate among the individual items applies to the entire value.
    • For example, caramel popcorn (18% GST) sold with a movie ticket (₹100, 12% GST) could result in an 18% GST rate for the entire transaction.

Expert Insights

Harpreet Singh, Partner (Indirect Tax) at Deloitte, explains: “A composite supply is where two or more supplies are naturally bundled. The principal supply determines the GST rate applied to the entire bundle.” However, when items are not naturally bundled, they may be classified as a mixed supply, leading to higher tax implications.

Rajat Mohan, Senior Partner at AMRG & Associates, highlights: “GST rate on popcorn bought with a ticket will vary between 12% and 18%, depending on whether it qualifies as a composite or mixed supply.”

Practical Takeaways

  1. For Consumers: Be mindful of the bundled pricing when purchasing tickets with snacks online to understand the GST impact. Loose popcorn purchased separately usually attracts a 5% GST.
  2. For Theatres: Ensure clarity in billing practices to differentiate between composite and mixed supplies to avoid tax disputes.
  3. Tax Authorities: Ambiguities in classification may lead to disputes, especially for premium snacks like caramel popcorn. Clear guidelines are crucial.

Conclusion

Understanding the GST implications of ordering snacks with movie tickets is essential for both consumers and businesses. Whether it’s a composite or mixed supply significantly impacts the tax rate. Always check the ticket and snack combinations to ensure accurate billing and compliance with GST laws.