Unintended Corporate (and Tax) Consequences of India’s Repeal of the #TamponTax

In July, 2018, India repealed its 12% goods and services tax (GST) on menstrual hygiene products. (News coverage here and here, e.g.) One (unintended, I suspect) consequence is the likely disadvantaging of domestic Indian manufacturers of these products. When the GST was in place, the manufacturers received what is known as an “input tax credit,” or a credit for certain component parts of the final product. For example, cotton is taxed at a rate of 5%, plastic packaging sheets are taxed at 18%. When the Indian GST on menstrual hygiene products was eliminated, the credit available to the manufacturers evaporated.  That means domestic Indian producers now must pay the 5% tax on cotton, 18% tax on plastic packaging sheets, etc. Foreign corporations, not subject to those input taxes, therefore will be able to offer the product more cheaply, in all likelihood. Some commentators believe that the Indian government caved to popular demand and/or pressure from…

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