Updated on: Feb 16th, 2022
3 min read
The government has completely exempted sanitary pads from GST by charging a 0% tax rate on the sale of sanitary pads. This article highlights the consequences of exempting GST on sanitary pads and inverted tax structures.
The GST rate on the sale of sanitary napkins is zero. However, GST rates on raw materials used for the manufacture of sanitary napkins are as follows:
|Super absorbent polymer
|LLDPE- packing cover
|Thermo bonded non-woven
With 18% and 12% on inputs and 0% on the sale of sanitary napkins, leads to a situation where the rate of tax on inputs is more than the rate of tax on output supplies. This is referred to as an inverted tax structure in GST. The manufacturers can claim the refund of input taxes, but it would result in additional financial and administrative costs on the company’s part.
On the other hand, importers have an added advantage as they are charged only with customs duty instead of customs duty+GST. Thus, the exemption of GST on sanitary napkins has benefitted the importers and not the local manufacturers. So, even if the imported products lack quality, they can easily penetrate the market due to low costs.
The GST rate on the sale of sanitary napkins was 12%. But, from 21st July 2018, the sale of sanitary napkins was exempted entirely. This was perceived as a major victory. But, the actual benefit to the consumers was very little. Exemption of output GST resulted in the denial of ITC to the manufacturers. Thus, with no difference in manufacturing cost, the manufacturers are not left with any price benefit which they can further pass down to the consumer.
|Sanitary towels, sanitary napkins, tampons
I preach the words, “Learning never exhausts the mind.” An aspiring CA and a passionate content writer having 4+ years of hands-on experience in deciphering jargon in Indian GST, Income Tax, off late also into the much larger Indian finance ecosystem, I love curating content in various forms to the interest of tax professionals, and enterprises, both big and small. While not writing, you can catch me singing Shāstriya Sangeetha and tuning my violin ;). Read more
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