India withdraws controversial tax on sanitary pads

Sanitary pads were taxed at 12 percent under the GST, which was launched a year ago.

And now sanitary pads will not fall under any category of Good and Services Tax. Several folks online have warned us all that we shouldn't rejoice because while tax might be zero, prices of sanitary napkins could actually increase to compensate for the lack of input credit tax. "The reduction (of GST rates) will have nominal impact on the revenue", acting finance minister Piyush Goyal told media after the meeting here on Saturday, adding that 100 items will be impacted by this change. Tax rate on ethanol has been slashed to 5 per cent from 18 per cent at present.

Goyal asserted on the importance of reducing the tax on ethanol, as not only is it used for blending with petrol and diesel, it is also vital for the sugar industry, and will thus be very beneficial for the sugarcane farmers.

In July 2017, citing the high tax rates of 18% and 12% on the inputs, the government had defended the decision to not lower the GST rate of 12% on sanitary napkins. They will have to, however, pay taxes monthly.

"Thank you. for understanding the need for menstrual hygiene and exempting sanitary pads from tax".

Other reports in recent years have linked a lack of basic infrastructure such as toilets in government schools in suburban and rural areas, as well as a lack of access to sanitary pads, with higher dropout rates among girls. The revised tax rates will come into effect from July 27.

Presently, registered persons with aggregate turnover up to Rs. 1.50 Crores are eligible to file quarterly returns under the new tax regime. In his first GST Council meeting since he took charge as the Finance Minister in May this year, Goyal also allowed businesses with turn over of up to Rs 5 crore to file quarterly returns - a move which will benefit 93 per cent of the GST registered taxpayers.

The government also reduced rates on an array of daily-use appliances and products, including small TV, washing machine, refrigerator, paint, perfume, footwear up to '1,000, and handicraft items. "Besides revenue collection, the GST council will now focus on job creation as well". They demanded the withdrawal of the 12 per cent GST on the pads.

Chartered Accountant Nitesh Jain summarised Saturday's announcements by the Council as efforts to simplify the system, remove as many items from the tax slab of 28 per cent and ease compliance.

Union minister Smriti Irani lauded the council for exempting sanitary napkin from the GST.

  • David Armstrong