Page 12 - Banking Finance January 2018

GST UPDATE

The Insensitivity of GST on Sanitary Napkins When Lok Sabha bill for GST

70% Women Still Can't Afford To Buy Them cess hike on luxury cars
India welcomed the Goods and Services Tax (GST), a new tax regime on July 1, to 25%
2017. The tax reform, which embodies
The Lok Sabha approved a bill to hike
the principle of "one nation, one tax, one
cess on luxury
market", had an impact on various indus-
tries in the country. While the GST has vehicles from
been greeted with cheers by many, it si- 15 to 25 per
multaneously has brought concerns over cent with a
the issues of sanitary napkins. view to en-
hance funds to compensate states for
A sanitary napkin should be considered as a fundamental right of every woman, revenue loss following the rollout of
as it is a necessity every month. Turning a deaf ear to the outcry of women to
GST. The GST (Compensation to
make sanitary napkins tax-free, the GST imposes 12% tax on this necessary item. States) Amendment Bill, 2017, was
Though there has been a fall from the earlier tax rate of 14.5%, the decision is
passed by the Lower House amid
still irrational, as products like sindoor and bindis are tax free. I cannot under- uproar by the opposition over contro-
stand how this makes sense for the government.
versial comments made by Union
Putting sanitary napkins, an essential need for almost all adult women, in a non- Minister Anant Kumar Hegde on
essential tax bracket, shows the utter ignorance of women's health issues by secularism and the Constitution.
the government. Back in 2012, the Union Health Ministry along with Family
The Bill seeks to replace the Ordi-
Welfare Ministry had launched a Rs. 100 crore scheme to push access and
nance which was issued in September
affordability of sanitary napkins among adolescent girls in rural areas. While it to give effect to the decision of the GST
faced access and safe disposal issues, the fact that it didn't significantly increase Council. The Ordinance provided for a
usage of sanitary napkins is a matter of concern. This means that there are other hike in the GST cess on a range of cars
factors than the cost, which hinder menstrual hygiene in India. from mid-size to hybrid variants and

the luxury ones to 25 per cent.
Despite note ban and GST India will borrow Rs 50,000
In reply to a short debate, Finance
crore more this year Minister Arun Jaitley said the funds
The government has for some time defended the two shocks it delivered to the collected following hike in cess on
Indian economy: demonetisation and a hasty rollout of luxury vehicles will be used to com-
the Goods and Services Tax. It said that these measures pensate states for revenue loss on ac-
impose honesty on taxpayers and will broaden the tax count of implementation of the
base. When the Reserve Bank of India admitted in Au- Goods and Services Tax (GST). He
gust that all the currency withdrawn from circulation said the GST Council, which comprises
during the note ban had returned, the government tried State finance ministers, meets every
to save face by insisting that revenues would reflect how successful the move month, and takes decision on ratio-
actual had been. Now it seems Indians will have to wait even longer to see that nalization of taxes in the backdrop of
broader base and subsequent success. revenue collection.
The Finance Ministry said that it will be borrowing an additional Rs 50,000 crore Participating in the discussion, mem-
in the current financial year a move that analysts say is likely to cause India to bers demanded that the GST rate
breach its fiscal deficit target this year. As a result, this will force an alteration should be reduced on a variety of
of the targets for the next few years as well. The fiscal deficit is the gap be- items including sanitary napkins, ag-
tween the government's expenditures and its revenues. It is essentially a mea- riculture equipments, handicrafts,
sure of how much the state has to borrow - and pay interest on - to meet its and handloom items and sports
commitments. When introducing the budget this year, Finance Minister Arun goods. Some members even sug-
Jaitley pegged the fiscal deficit for 2017-'18 at 3.2% of the Gross Domestic Prod- gested that there should be single tax
uct with the aim of achieving 3% the following year. slab instead of four.

12 | 2018 | JANUARY | BANKING FINANCE

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