The Goods and Services Tax (GST) Council defended the 12 percent tax rate on sanitary pads and placing disability aids in 5-18 per cent tax slab.
Government officials cited three reasons to justify the tax rates: To protect local manufacturers, avoid an inverted tax structure and to keep the new tax rate at the same level or lower than the old one. An official in the GST Council said on condition of anonymity that the issue was discussed in detail before finalizing a tax of 12 per cent on the product, reports Hindustan Reports.
"A 12 per cent GST rate is at par with its earlier tax burden including central and state taxes (or a bit lower depending on the state where it is purchased)," this person said. "Secondly, some of the raw materials used such as polymers attract a higher 18 per cent rate which makes it hard to reduce the tax rate on the finished item without adding to the cost of producers." While companies can claim credit for tax paid on intermediate goods, a huge differential between the tax rates on intermediate goods or inputs and that on the finished product would mean that they end up with tax credits that they can't use.
As far as disability aids are concerned the finance ministry said in a statement on Tuesday that many of the inputs used in the manufacture of these disability aids attract 18 per cent tax. In addition, the ministry said, 22 assistive devices and rehabilitation aids for physically challenged persons would attract a concessional 5 per cent GST rate.