At a time when the country is fighting against the dreaded coronavirus, the Central government’s decision to impose 18 per cent GST (Goods and Services Tax) on sanitisers is both puzzling and insensitive. This will not only add to the problems of people but may also critically impact public health, especially when the Covid-19 situation is worsening by the day.
If sanitisers, which have now become an item of daily use, are made costlier the battle for public health will suffer. India’s teeming millions are already in acute financial crisis following the pandemic. Targeting sanitisers, now being used widely at least by the middle-class, suggests the Government wants to profit from misery.
Ever since the GST regime came into force, sanitisers were taxed at 12 per cent under what is called the medicaments category. For three years, this was acceptable to tax authorities. After the virus outbreak and spike in sales of sanitisers, the Government began issuing notices to manufacturers accusing them of evasion as it claimed the product should have been taxed at 18 per cent as a disinfectant.
While the lament of manufacturers that they are being targeted when they ought to have been lauded as Corona warriors is misplaced – they are all making hay while the sun shines – there is no reason to penalise customers. State governments and political parties, caught up with weightier political battles, have largely ignored the imposition.
If the Centre’s claim that it consulted the GST Council before hiking the tax is correct, the complicity of state governments in the new construct would seem evident. The consumer affairs ministry had classified hand sanitisers as an essential commodity in the wake of the pandemic. If anything, this would have suggested withdrawal of duty, not an enhancement.
The finance ministry has argued that sanitisers attract GST at the rate of 18 per cent because these are like soaps and antibacterial liquids, all of which attract duty at the standard rate of 18 per cent. If so all of them should either be taxed lower or spared the burden of tax. When the need of the hour is to increase the use of these products, this tax rate seems inhuman.
The Centre has taken the view that inputs for manufacture of hand sanitisers such as chemicals, packing materials and input services, also attract GST of 18 per cent. Reducing the GST rate on sanitisers and similar items would lead to an inverted duty structure and put domestic manufacturers at a disadvantage against importers.
Of course, it will not occur to the tax bureaucracy that this is a time to be humane and considerate, and not bound by rules. Industry, too, should find it possible to accept lower profits at a time when the people of the nation are suffering from an unprecedented crisis. If public funds can be used for giving stimulus packages, the corporate sector should be urged to focus on its social responsibility.