The Bhartiya Janta Party (BJP) government scrapped a goods and services tax (GST) on sanitary pads on Saturday, a move which was hailed by many on social media.
Sanitary pads were being taxed under the 12 per cent slab of under GST since July 2017.
However, before Saturday, the BJP government had many times defended its decision to impose 12 per cent GST on sanitary pads. Former finance minister Arun Jaitley had even called the debate on sanitary napkins GST an “ill-informed debate”.
When BJP defended GST imposed on sanitary pads
Speaking at the Hindustan Times Leadership Summit in November 2017, Jaitley was posed the question as to how basic sanitation products like sanitary pads for women could fall under the high tax bracket.
Jaitely had then said, “Before the GST regime was implemented, several hidden taxes and duties led to Sanitary Pads having an effective tax of 13 per cent over the price. So that is already reduced to 12 per cent by bringing it under the GST.
Since the manufacturing costs are cut with the input credit system, the benefit can even be passed on to the customer in the form of lower base price. Apart from the input tax credit boosting the indigenous manufacturers, it also protects them from Chinese imports.”
He added, “This is because the Chinese imports have a lower base price than Indian products. Removing the GST completely from the sanitary pads would result in loss of input credit to Indian manufacturers and would drive up manufacturing costs even further. Thus, the GST keeps Indian goods competitive.”
As recent as February 2018, Jaitely repeated the same explanation at another show on Indian news channel, India TV. Jaitely even went on claiming that the Chinese companies have a huge role to play behind this demand of exempting sanitary napkins from GST.
He was quoted saying, “Women in village self-help groups who manufacture these napkins are all under Rs.20 lakh and thus, GST is not implied on them. The big Indian companies that manufacture, pay very negligible net tax after input credit.
Suppose, we make the tax 0%. Then, those few Indian companies will benefit with that 3-4%. However, all those Chinese companies who had to pay 12% IGST apart from customs duty, now they will pay 0. And the Make in India brand of sanitary napkins will fall down to zero and the Chinese companies will now have monopoly.”
“If you want sanitary napkins to be sold only by the Chinese companies, then neither will there be any village self-help groups left nor Indian domestic companies. Sometimes when I look, on the face of it, it seems like this is the demand of women but then I look in between the lines, I find what it really is,” he said.
Now, an important question to ask the Modi government is, were we being fooled back then or are we being fooled today?
Was the BJP actually protecting the Indian manufactures or simply shielding itself from the huge embarrassment of admitting that it shouldn’t have imposed GST on sanitary pads in the first place?