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GST impact: Sanitary napkin to TV makers, list of unhappy firms is growing

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After the July 21 rate revisions, the number of companies unwilling to pass on GST benefits is higher than after the Novemeber 2017 round of rate revisions. The latest round of rate revisions introduced by the Goods and Services Tax (GST) Council on July 21 has led to a peculiar situation. The number of companies unwilling to pass on GST benefits is higher than in previous rounds. While the November 2017 round of rate revisions saw mainly eating joints unwilling to pass on GST benefits, this time round, sanitary napkin makers, TV manufacturers and even paint companies have said passing on GST benefits is not a feasible exercise.
Firms in each of these categories have their reasons for the resistance. The Feminine and Infant Hygiene Association (FIHA), which represents the country's top sanitary napkin makers including Johnson & Johnson, Procter & Gamble, Kimberly Clark and Unicharm, said the decision of putting the item on the exempt list was unlikely to achieve the desired objective. “The exemption of sanitary napkins from GST effectively denies input tax credit to companies manufacturing in India. As a result, in order to offset the loss, companies will not be able to pass any significant benefit to consumers,” FIHA said.
While the government has asked for a break-up of the costs involved in making sanitary napkins, players argue that putting the item in the exempt list will benefit importers. “We pay 18 per cent GST on inputs used for making sanitary napkins. A 12 per cent GST on finished products allowed us to avail a set off (against input tax), which will not be there now. This will make it unviable for us to make sanitary napkins locally, boosting imports instead,” said Kamal Johari, managing director, Nobel Hygiene, said.
The Business Standard, 30th July 2018, New Delhi

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