Economy

Feminine hygiene now tax-free in India; sanitary napkins out of GST net

Feminine hygiene now tax-free in India; sanitary napkins out of GST net

The GST Council has pruned the 28% slab by cutting tax rates on 191 goods over the past one year, leaving just 35 items, including AC, digital camera, video recorders, dishwashing machine and automobiles, in the highest tax bracket.

But the tax sparked protests, petitions and lawsuits that questioned why the government would tax sanitary pads and tampons as luxury goods rather than an essential item, such as condoms, which are tax-free.

In a bid to woo the middle class ahead of the general elections, the government on Saturday slashed GST rates on over 100 products and services and simplified return filing process for businesses. Tax exemptions mean there would be no input tax credit available, even though inputs in the production of sanitary napkins are taxed.

Among several items on which GST was reduced include footwear, small televisions, water heater, electric ironing machines, refrigerators, lithium-ion batteries, hair dryers, vacuum cleaners, food appliances and ethanol. The revised tax rates will be applicable from July 27. Quarterly returns for business turnover up to Rs 5 crore instead of monthly filings. Sources said the Council may consider a reduction in tax rates on the host of items with low revenue implications as part of the tax rationalization exercise. If separate returns are to be filed then it will complicate matters for businessmen in both B2B and B2C businesses, he said.

Keeping long-standing demands from woman's rights advocates and popular sentiments relating to the Raksha Bandhan festival in mind, the council has also exempted rakhis, along with sanitary pads and small handicrafts, from the GST.

Minister in the Prime Minister's Department (Legal Affairs) Datuk Liew Vui Keong said the government will be tabling a motion to abolish GST next week. The council cut taxes on sanitary pads and fortified baby milk to zero, Goyal said.

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"Today's meeting has taken a number of decisions unanimously".

The tax rate on ethanol blended with petrol, footwear costing up to 1,000 rupees and fertiliser grade phosphoric acid has been cut to from 12 to 5 percent, Goyal said.

In a big relief to hotels, 28 per cent GST won't apply if the actual money collected is less than Rs 7,500 regardless of the published tariff.

The Council has also made a decision to defer implementation of reverse charge mechanism (RCM) by a year to September 30, 2019.

The council has recommended about 17 amendments under the CGST, IGST, UTGST and the GST (compensation to states) laws. In its meeting in November a year ago, the Council had reduced rates in over 178 items in the 28 per cent tax bracket. "By imposing 12% GST on sanitary napkins, the government has tried to make a mockery of women", said Pooja Singh, Secretary of the NGO.


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