After a nine-hour meeting of the GST Council, chaired by acting finance minister Piyush Goyal, the government on Saturday chose to exempt GST on sanitary napkins; deities made of stone, marble or wood; Raakhis without precious metals; raw materials used in brooms; commemorative coins; fortified milk; and the premium paid under the Ayushman Bharat Scheme. Jaitley, and the press release, made the following argument: Before GST, sanitary napkins were effectively taxed at more than 13%, and they had been brought down to 12% under GST.
Reactions flowed in from many women politicians after Finance Minister Piyush Goyal announced that sanitary pads are now 100 percent exempt from tax. The Finance Minister also informed that several products inclusing the sanitary napkins are now have been kept outside the GST ambit.
Experts believe that while prices may fall due to the rate cut, the reduction may not be significant the input tax credit issue may result in manufacturers increasing the overall price of the product.
Apart from sanitary napkins, rakhis, fortified milk and idols of deities made of stone, marble and wood were also exempted from GST.
The new national GST (goods and services tax) was introduced last July under Prime Minister Narendra Modi, and was the country's biggest tax overhaul in a generation.
GST Council also allowed businesses with turnover of up to Rs 5 crore to file quarterly returns - a move which will benefit 93 per cent of the GST registered taxpayers.
The reverse charge mechanism that asks the buyer to pay tax if goods are procured from an unregistered dealer has been deferred for one year. It is estimated to cause a revenue loss of around Rs 8,000-10,000, crore with cuts in the peak 28% slab alone costing the exchequer about Rs 6,000 crore.
These amendments will now be placed before Parliament and the legislature of the state and Union territories for carrying out the amendments in the respective GST acts, the minister said. While the changes will offer relief to the middle-income households and small businesses, sources say the government stands to lose revenue to the tune of Rs 15,000 crore. In its meeting in November past year, the Council had reduced rates in over 178 items in the 28 per cent tax bracket.
It's ridiculous to remember that Maneka Gandhi was ever of the opinion that 12 percent tax was alright as long as Self-Help Groups (SHGs) were encouraged to make their own biodegradable pads.