Rajkot: The central government has exempted sanitary napkins from Goods and Service Tax (GST) since July 2018. However, manufacturers argue that this move has not resulted in a significant reduction in price of the products. The raw materials used in the production of sanitary napkins still attract a GST ranging from 12% to 18%, which ultimately increases the cost of the final product.

Manufacturers in Gujarat have been urging the central government to either exempt these raw materials from GST or reimburse the tax paid on them to make sanitary napkins more affordable.

The production of sanitary napkins involves around 12 types of raw materials, including air-laid paper, tissue paper, super absorbent polymer, hydrophilic non-woven fabric and glue. These materials attract GST of 12-18%. Gujarat is home to approximately 10 major sanitary napkin manufacturers with a collective turnover of Rs 600 crore per year.

Recently, the central government informed the Supreme Court that it was in advanced stages of formulating a policy to distribute menstrual hygiene products for free to school-going girls. 

Gujarat manufacturers emphasize that despite the exemption of sanitary napkins from GST, market prices have not decreased due to the GST levy on raw materials. In the GST regime, an input tax credit (ITC) system is in place to curb tax evasion, allowing manufacturers to claim credit for taxes paid on raw materials at each production stage. However, sanitary napkin manufacturers cannot collect GST from the end user, forcing them to add the cost of GST paid on raw materials to their production costs.

Nagji Sheradiya, a manufacturer having unit in Lothda village near Rajkot, said. “I have been representing this issue with the central government since 2019 with the demand to exempt raw material from GST or reimburse us the GST paid on raw material in order to provide tax-free sanitary napkin in real sense. The government exempted this item from GST overnight as a result manufactures lost crores of rupees in 2018 in ITC.”

Kunal Patel, who has a manufacturing unit in Kim, Surat, shares similar views. “If government exempts raw material from the GST or reimburse us GST paid on raw material, the market price of sanitary napkin will come down by 15%.”

The Rajkot Chamber of Commerce and Industry (RCCI) has also raised this issue before the Central govt, stating that “The import duty on this product is zero and there is a GST on raw material which does not give local manufacturers a level playing field in the market.”