The tax on Sanitary Napkins ..

The new Goods and Services Taxes reform billed as the most sweeping of the economic reforms in India (and in the world). It is an important aspect of integrating the states further into a single market has caught the imagination of many. (I hope this could pave way for an eventual single South Asian market too.) Though a lot of FAQ's , strategies and unabashed advertisement by Consultancy companies for providing advice on tax have been published across the media, there has been some considerable drivel as well.

This  post (and this) has been widely shared, outraged upon. On the surface the non-Taxes on Sindur Vs taxes (at 12%) on Sanitary Napkins, does seem a fair case of giving, as the writer Binjal Shah says “The right to flaunt your religiousness is higher above the right to sport good genital health.” Indeed Sindur appearing in chapter 33 of the GST list is taxed lower than Saniraty Napkins appearing in chapter 96. However, on a deeper reading one realises that, it is as accurate as Ashok Dinda's yorkers in death overs. 

"How can they tax sir?"

Binjal says, “For when she (the Indian woman /girl) actually bleeds in this country, let’s scramble into denial about this excruciatingly beautiful phenomenon that is the cornerstone of humanity itself. Let’s pretend it does not exist. Let’s pretend that 88 percent of the girls in India do not use unsanitary cloth, dry leaves, newspapers, sand, and plastic during menstruation.” Focusing on filling the article with rich imagery and long words (nearly 7 words exceed 7 letters in the above quote) the writer, forgets to even attempt an understanding of GST, let alone understand why the difference between the products in the taxation. Let me ExMansplain. 

In brief, the GST rate indicates the total tax on the finished product (including the sum of all taxes paid as part of inputs in every other stage) and not only the "Sales Tax" at the point of the final seller. At every stage, the subsequent seller receives a tax credit made at the earlier stage while producing the good, subtracting it from the total tax levy. To make a product taxed at zero under GST would mean there is no additional tax burden over and above the inputs necessary to make it. (I’d think that the lower GST than those of its components would indicate a Subsidy.). The detailed explanation of how GST will work, subsume taxes like VAT, Sales Tax, Octroi , Service tax, and benefit the economy, etc. would be better explained here, here and, here. This would and also ensure you put effort to read (unlike Ms. Shah of Your Story) some actual documents. before outraging.

How do the Tax Slabs work?

It is imperative to consider the following. The more a product is processed (or inputs are added) higher is the service or value added component. More the processes involved, higher is the saving of time at the consumer's end and thus increasing the luxury component of the product. Higher the luxury component, higher would be the tax under a socialist-democracy like ours. This can be illustrated with the simple example of milk. As you go from left - (raw milk at nil tax) to right (butter, condensed milk etc at higher tax slabs), you can see a gradual shift in the amount of processing or inputs.

How is the Tax on Sanitary Napkins worked out?

The major components of  Sanitary Napkins (or even baby diapers) are rayon (or cellulose material), plastics and in many cases perfumes and fragrances. The inputs in the Sanitary Napkins themselves are processed goods (cellulose from trees, plastic largely from petrochemicals), and could be finished goods in their own stead (perfumes / fragrances). Thus, the rate of taxes will be automatically higher as exmansplained above.  However, considering the credits on taxes paid earlier on the inputs, the effective rate of tax would be around 5% at the consumer level. For Sanitary Napkins as final products  to be a part of the "No Tax" or even the 5% tax slabs, majority of the the inputs used, need to be majorly in the same slabs or also need to be declared tax free. 

Wood pulp a major input of the rayon required to make Sanitary Napkins is also taxed at 12%. 

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This is impossible considering that, though Sanitary Napkins can be considered a necessity, the raw materials are not and have alternative luxurious uses. Perfumes which are luxury goods and are appropriately taxed at 28%. In addition, how are goods with similar components taxed? Appearing in Chapter 48 under (Paper and paperboard; articles of paper pulp, of paper or of paperboard), items including tampons are taxed at 18%! 

Tampons, Napkins for babies of wood pulp being taxed at a much higher 18%

Also remember it is manufactured largely by a limited number multinational companies having huge turnovers. They, by no means will be flexible on prices, whatever may be the taxes. 

How does it work for Sindur?

Sindur, is made mostly by from turmeric and contains very little value addition, in terms of processing. Fresh turmeric the raw material falls under the "No Tax" slab. It is largely made by small scale or household businesses with little revenues, making it inefficient and expensive for levying and policing the collection of taxes.

Where are the articles flawed? 

Both being used heavily used by women aside, there is little in common between the goods compared. They aren't at the same stage of the value chain as an end product, they aren't manufactured on the same scale and they don't have similar type of inputs. The only way they can be compared is through this fact-free moralising lens of the Left Liberals. There is a lack of understanding of basic production processes and components of products even they use heavily. Baby diapers, one would notice are taxed at a higher rate(18%). This product could ease the women's to entry back into the workforce after pregnancy could be rationalised to the levels of sanitary napkins. (However, this could offend second-wave feminist who would rather advocate that motherhood is a social construct rather than a biological phenomenon.) Alternatively there could be a demand for subsidy on the production of say special categories of Sanitary Napkins like the case of condoms. 

To conclude.. 

Indian women are oppressed in many ways. Cultural practices could indeed be the cause  as in the case of Triple Talaq, Dowry Marital Rape, Female Infanticide etc. Considerations to Women's rights, accessibility are also given little preference in policy making. These are all undisputed and we need more voices against them but, this is not one such case. It is necessary to direct our efforts towards actionable causes than outrage over fact-free journalism.