‘Lahu ka lagaan’ ends: Sanitary products made tax free

Oscar PerryJul 23, 2018

28th meeting of the GST Council begins in New Delhi.

The council on Saturday cut rates on 88 items, including ethanol, carpets, fridge, washing machine, paints and varnishes and also allowed input tax credit for textile sector. GST exemption for sanitary napkins means that the input tax credit would now not be available to the manufacturer.

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 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.

The GST on sanitary pads has been cut from 12 per cent to zero.

Sources, however, said the tax rate reduction is likely to cost around Rs 8,000-10,000 crore annually to the exchequer.

Experts said going forward as the revenues stabilise, the Council may look at further rationalisation of the 28 per cent slab, to restrict the highest tax slab to super luxury and sin goods. This could benefit 93 per cent of tax payers.

It's ridiculous to remember that Maneka Gandhi was ever of the opinion that 12 percent tax was alright as long as Self-Help Groups (SHGs) were encouraged to make their own biodegradable pads. He said, the decisions taken today will be applicable from 27th of this month.

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Apart from sanitary napkins, rakhis, fortified milk and idols of deities made of stone, marble and wood were also exempted from GST.

Taxpayers who are yet to register under the GST have been given a final extension till August 31.

Tax filers with an annual turnover of less than Rs. 5 crore a year need to file returns on a quarterly basis while paying tax on a monthly basis.

Australia also continues to apply a tax while Ireland and Kenya are among the nations to have abolished taxes on sanitary products.

While hotels with tariff below Rs 1,000 are exempted from GST, those with tariff between Rs 1,000-2,500 are taxed at 12 per cent, those between Rs 2,500-7,500 at 18 per cent, and above Rs 7,500 at 28 per cent.

This is the fourth time since the roll out of the GST that the Council, chaired by Union Finance Minister and comprising state counterparts, has rationalised rates. The Council will meet next on August 4.

Earlier, the council had revised tax rates on 29 items in January.

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