By Ankita Gupta
In a recent interview on BBC, Twinkle Khanna voiced her criticisms of the American Tax structure where an excise is levied on sanitary pads, whereas Viagra is tax-free. “Because policies are made by 65-year-old men with erectile dysfunction,” added the actor-turned-writer (fondly called Mrs Funnybones).
Are sanitary napkins and Viagra comparable?
Twinkle Khanna, who had been promoting the upcoming movie ‘Padman’ was lauded on social media for taking an open dig on the existing Goods and Services Tax (GST) ambit. A large number of people supported her opinion on such important issues (although there were the habitual trollers lambasting her comments).
Sanitary napkins are essential menstrual hygiene products that have been placed in the 12% GST bracket. They are a necessity for women, not a luxury. The exigency of Viagra, however, as an indispensable treatment for erectile dysfunction, is subject to debate. But the fact remains that the tax rate imposed on Viagra in the United States of America (USA) is not comparable with the taxation of sanitary napkins in India. Viagra actually has a 12% GST toll in India. Even though both are manufactured to cater to biological human needs, they are different products, with different input materials.
GST’s conundrum: Why tax sanitary pads?
Before the advent of the GST, the taxes levied on sanitary napkins were nearly 13% of the original cost. This included the sum total of the Central tax, State tax and embedded taxes. The situation improved (slightly) post GST, where the final excise on sanitary napkins came down to 12%. This includes the ‘Cost Credits’ for the manufacturers. In reality, the ‘input items’ for the pads, such as adhesives, are taxed at 18% GST. Therefore, as per our present ‘Inverted Duty Structure’, the output item has a lower tax rate (12%) compared to the input items (18%).
Manufacturers redeem these tax credits against GST on the sale of the product. If sanitary pads were made tax free, then the purchase tax credits will be uncollected and add to the ‘cost’ of the final product. Thus the MRP of the sanitary pads can flare, even with 0% GST levied. This kind of tax system might injure the merchandise, as is reported in the fertilizer industry. The entire idea is to achieve a reduction in the overall cost of sanitary napkins- not just the tax.
Reduce costs and increase hygiene awareness
In a case filed by the Women Welfare Foundation, it was revealed that 88% of women are unable to access sanitary napkins on account of low awareness and high costs. Subsidising the cost of pads is an important issue because it affects the health and hygiene of half the population. Experts have suggested the incorporation of a price control mechanism used for essential drugs to achieve concessional rates. Even though Twinkle Khanna has been trolled for making abstract comparisons, her comments have highlighted the tax issues that plague the nation. Her remark on the policymakers dealing with such issues also brings women representation into question.
Featured Image Source: Pixabay
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