Tuesday, January 19, 2021
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Industry bodies reject Rahul Gandhi’s demand for GST waiver on COVID-19 related equipment, say they don’t need any exemption

Industry bodies clarified that they have not asked for an exemption from the GST on their products used to fight Coronavirus

Former Congress President Rahul Gandhi was once again caught shooting himself in the foot. In yet another attempt by him to win over the estranged MSME sector which has traditionally aligned itself with the Modi government, the Wayanad MP posted a tweet demanding the government to relinquish the GST, IGST and Customs Duty on the essential products to combat the novel coronavirus. The Gandhi scion had asked the government for a GST waiver for the MSME organisations who have been involved in the production of important equipment such as masks, personal protective equipment (PPE) and other vital things critical to the fight against the Wuhan Coronavirus.

However, the Textile MSMEs and councils rejected the demands made by Rahul Gandhi on their behalf, stating they are manufacturing the crucial safety equipment such as PPE for India’s healthcare professionals and they have not asked for an exemption from the GST on their products from the government.

The Apparel Exports Promotion Council issued a tweet saying “The AEPC manufactures-exporters are making PPEs for our Health Professionals who need all our support at this hour of unprecedented crisis. Hence, they do not mind paying GST on these products and have not requested this exemption from the Government.”

One of the Textile MSMEs, JCT Textiles Limited, slammed Rahul Gandhi saying it is grateful to the government for all the support that has been extended to him and have not asked for any GST waiver from the government. “JCT Textiles pioneered the first indigenous PP Hazmat Suit and is honoured to supply to the MoHFW. We are grateful to the Government of India for all support and have not asked for any waiver of GST,” they said.

While Gandhi attempted to score brownie points with the MSME sector with his demand for a GST waiver for the organisations involved in the manufacturing of the vital equipment necessary to battle coronavirus, it appears that the Gandhi scion has not taken a cue from the catastrophic consequences of the government’s mistake of giving in to misplaced activism and exempt sanitary pads from the GST. If the government exempts all the COVID-19 related equipment from GST, all the input taxes payable on raw materials used for manufacturing of the equipment such as masks and PPEs, won’t be eligible to claim Input Credit. Consequently, the local manufacturer would add it to the cost of the finished product which would ultimately be paid by the consumer. This would make locally manufactured coronavirus equipment more expensive for consumers.

How exemption of sanitary pads from GST had spelt disaster for the manufacturers

Soon after the misplaced activists ran a campaign demanding exemption of sanitary pads from the GST, the government impetuously gave in to the popular demand and exempted sanitary napkins from GST. However, the move did not augur well for the napkin manufacturers. Before long, the manufacturers hiked their base price. They complained that the cost of production of sanitary napkins had gone up because of the move by the government. They said that since the raw materials like wood pulp, adhesive, release paper, packing material and other commodities are taxed 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 tax-free. The manufacturers increased their base price in a bid to offset the hiked cost and the fact that they were getting no input credit owing to napkins being exempt from GST. In the end, the end product, i.e sanitary napkins, ended up becoming more costlier than they already were without the exemption.

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