National Award winning Bollywood actor Akshay Kumar, whose film "Pad Man" tried to create awareness on menstrual hygiene, has thanked the GST Council for making sanitary napkins Goods and Services Tax (GST) free.
Sanitary napkins, which attract 12 per cent tax, and fortified milk, which was taxed at 18 per cent, have been exempt from the new indirect tax. "Rakhis have been exempted from GST, tax on ethanol has been cut to 5 per cent, small handicrafts have been exempted", union minister for finance Piyush Goyal said in a statement. Tax exemptions mean there would be no input tax credit available, even though inputs in the production of sanitary napkins are taxed. It is expected that the council will also decide on the revision of tax rates on vending machines and lithium-ion batteries among others.
The council on Saturday cut rates on 88 items, including ethanol, carpets, fridge, washing machine, paints and varnishes and also allowed input tax credit for textile sector.
Mr Goyal said, GST rate on handbags, jewellery box, wooden box for paintings, artware of glass, stone endeavour, ornamental framed mirrors and handmade lamps were reduced to 12 per cent. Yet a few have raised questions about what the new rate will actually mean, and why the government had spent the past year arguing that a lower tax rate would be a bad thing.
Earlier, in the press conference the minister had said that the rates were rationalised on 100 items.
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However, the decision to raise quarterly filing of returns from Rs 1.5 crore to Rs 5 crore annual turnover, may not actually materialise, fear tax experts. 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. "The rate rationalisation will substantially reduce the tax burden for a large number of commodities", Bipin Sapra, tax partner at EY India, said.
Last year, lawmaker Sushmita Dev launched a petition to demand a reduction or total removal of taxes on pads, citing that about 70 percent of women in India could not afford them.
Taxpayers who are yet to register under the GST have been given a final extension till August 31.
Besides revenue collection, the GST council will now focus on job creation as well, the Finance Minister said.
The minister further informed that the council would have a special meeting on August 4 to address concern of small and medium enterprises. In its meeting in November a year ago, the Council had reduced rates in over 178 items in the 28 per cent tax bracket.