Price of misplaced activism: Post GST exemption, manufacturing cost of sanitary napkins up

Not too long ago, activists had come together to start a “lahu ka lagaan” campaign that demanded sanitary napkins be exempt from GST. The government was often branded anti-women to have included sanitary pads in the GST bracket. Even Twinkle Khanna, party because of her misplaced sense of activism and party because her husband’s movie, Padman, was up for release, created a brouhaha over the issue of sanitary napkins being included in the GST bracket and we had written about how she was so, so wrong. At the time, Arun Jaitley had also explained why sanitary napkins shouldn’t be exempt from GST as well.

However, soon, the government gave in to popular activism and exempted sanitary napkins from GST. While the activists celebrated, the manufacturers felt the heat of this move.

Reports have emerged that Rajesh Shah, President of the Feminine and Infant Hygiene Association of India has written to Arun Jaitley urging the Finance Ministry to reconsider their position and instead include sanitary napkins in the 5% category. He reportedly said, “Instead of taxing sanitary napkins at 0%, the government should have classified the product under the lowest tax slab so that the mechanism of GST is intact and the product is less expensive. This is the main point we have made to the government.”

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Manufacturers too have hiked their base price. They have complained that the cost of production of sanitary napkins has gone up because of this move by the government. They said that since the raw materials like wood pulp, adhesive, release paper, packing material and other commodities at 12%-18%, they end up paying GST, but it won’t be refunded in the form of input tax credit since the end product has become taxfree.

The manufacturers have hiked their base price in a bid to offset the hiked price and the fact that they are getting no input credit owing to napkins being exempt from GST.

“The exempt status of the finished product of sanitary napkins from GST effectively denies input tax credit to companies on the inputs that go into the manufacturing, distribution and promotion of these products in India. As a result, companies in this area will only be able to pass on to consumers the net benefit of this exemption,” said a spokesperson of Johnson & Johnson, a manufacturer of a range of products.

He also said that “the gains from lower taxes are offset by the higher input taxes that are now incurred.”

GST officials said the council may consider this matter in its August 4 meeting.

GV Krishna Rao, GST principal commissioner, who represents Karnataka zone in the GST Council said “making local industries competitive against imported napkins is imperative apart from other things related to pricing. The council will look into it”.

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