India withdraws controversial tax on sanitary pads

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India's interim finance minister, Piyush Goyal, said today: 'I am sure all mothers and sisters will be very happy to hear that sanitary pads are now 100 percent exempt from tax'. Earlier, sanitary napkins were taxed at 12% which had attracted a lot of criticism.

According to the Indian Express, Piyush Goyal was asked about this: "When asked, Goyal said calculations showed that input tax credit on sanitary napkins was about 3-4 per cent, and the government would ensure a lower price for the end product".

The Council brought down tax rates to 18 per cent from 28 per cent on 15 items, including vacuum cleaners, washing maching, 68 cm (27 inch) TV, fridge, laundry machines, paints and varnishes.

Other than sanitary napkins, rakhi too has been made GST free.

The announcement comes a year after the government introduced the tax, known as GST, on all goods - including the 12% duty on menstrual hygiene products.

The reality is, this group may find it hard to spare money for sanitary napkins even after the tax exemption. Yet a few have raised questions about what the new rate will actually mean, and why the government had spent the past year arguing that a lower tax rate would be a bad thing.

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Amar Tulsiyan, founder of Niine Movement, called Saturday's decision "a big win for everyone" in India, where, he said, 82 percent women and girls have no access to sanitary pads. This could benefit 93 per cent of tax payers.

The reverse charge mechanism has been deferred by a year to September 30, 2019, the minister said, while adding that the businesses with turn over of up to Rs 5 crore can file quarterly returns. It is estimated to cause a revenue loss of around Rs 8,000-10,000, crore with cuts in the peak 28% slab alone costing the exchequer about Rs 6,000 crore.

Deloitte India Partner M S Mani said it would be logical to expect that once the GST collections after the recent reductions stabilise, the remaining items such as televisions of all sizes, dishwashers, digital cameras, air conditioners could be considered for an 18 per cent rate.

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

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. With the stabilisation of revenue, the rate on many items were gradually reduced.

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