Written by Bipasha Mandal
“India is a land where contradictions will continue to abound“, says Rama Bijapurkar half sardonically, half despairingly in his book ‘We are Like that Only: Understanding the Logic of Consumer India’. He couldn’t be closer to the truth. In theory, the Constitution guarantees equality and equal opportunity for everyone. In practice, 60% of girls miss school due to lack of access to sanitary products.
The need of the moment, it would seem then, is to direct our efforts towards thinking out a way to enable people to go through their periods with dignity and minimum hassle. But this seems not to have been among the government’s priority lists when it framed the 2017 GST.
Under it, a tax of 12% was imposed on period products (1.36% less than the previous VAT system). For a country in which around 58% of the women use sanitary napkins, according to NHFS-IV data, the Indian government seems to be astonishingly indifferent. A major cause of reproductive health risks is the use of improper and even harmful materials to contain the menstrual flow. Since it was high time, the people decided to take matters into their own hands.
Under VAT, taxes were added to each level of manufacturing and distributing process, right up till selling a product off to the customer. It was a ‘tax on taxes’ system. GST, however, assigns products to seven tax slabs with a fixed single tax rate – Exempted or 0.25%, 3%, 5%, 12%, 18% ,28%. Items of regular consumption, things that cannot be done without, such as salt, food grains, vegetables, printed books, and newspapers come under the ‘exempted’ slab.
Why then, asked menstruators, should period products, which similarly cannot be done without, be grouped with items like cell phones, processed foods and playing cards, under the 12% rate slab? The classification of period products as non-essential items under the GST had kick-started a wave of protests. Menstruators voiced their concerns, with the hashtag #LahuKaLagaan (tax on blood) which spread like wildfire across the internet.
Petitions were signed across the country demanding a revoking of this move, the most notable of them being the ones submitted by Zarmina Israr Khan, a PhD scholar of African studies at Jawaharlal Nehru University to the Delhi High Court highlighting that such an action is ‘unconstitutional, illegal and arbitrary’ and Shetty Women Welfare Foundation’s petition to the Bombay High Court. Zarmina Israr Kan’s petition cited the violation of several fundamental rights, right to life and equality among them, incurred by the tax, keeping in mind particularly the plight of underprivileged women.
The Delhi High Court questioned the Centre on the absence of female members from the GST Council and asked whether the GST was framed in consultation with the Ministry of Women and Child Development. The Centre defended its law by stating that a reduction of tax on sanitary products would mean that manufacturers could not claim the input tax credit, which is a loss also for the government revenue.
A manufacturer pays taxes on the raw materials. These are offset by the output tax embedded in the selling price paid by the dealer when he buys the product from the manufacturer. The manufacturer claims the selling amount that covers his taxes as an input tax credit. The government claims the credit liability or the amount left after subtracting the input tax or tax on raw materials from the output tax.
Manufacturers of products exempted from GST are not liable to collect input tax credit. It is estimated that the raw materials for period products such as wood pulp, cotton and polymer are taxed from 12% to 18%.
The inability of the manufacturers to claim ITC has several implications. Big companies can offset their losses on period products with gains from other departments, but this will prove especially damaging to small-scale manufacturers.
Furthermore, the tariff cut would disadvantage local manufacturers as they would have to face competition from imports which are exempted from other payments to the government. The increase in the costs of sanitary products could very well be a knee-jerk reaction to these, worsening the already yawning gap between the haves and have-nots of menstrual hygiene.
The Supreme Court stayed the proceedings at the Delhi and Bombay High Courts requesting a further investigation in the matter and even considered hearing the two petitions as a single case. On 26th July 2018, the Government of India issued a notification to scrap the 12% tax on sanitary products which came into effect the next day and has remained so till now.