It seems like a tough road ahead for sanitary napkin manufacturers, especially the giants -- Procter & Gamble (P&G) and Johnson & Johnson (J&J). Taking forward the issue of whether sanitary napkin manufacturers are passing on the benefit of reduced GST rates or not, government officials said that the National Anti-Profiteering Authority (NAA) is unhappy with their initial response.

Recently, P&G and J&J were called by the NAA post Finance Ministry had raised concerns over the two not reducing prices on sanitary napkins to the tune of the reduction in taxes. The companies have already submitted detailed representations to the revenue department and NAA, explaining their calculations, thereby presenting their case. “P&G and J&J have met us. The two in their representation have cited that a flat 12 percent

reduction on all products not possible. They say that since there is a wide product range under the sanitary napkins category, with separate input costs, the reduction passed on to the consumers ranges accordingly,” NAA official talking to CNBCTV18 said.

NAA, which is now left unsatisfied has directed DG-Anti Profiteering to look deep in the allegations of profiteering against these companies. “We have asked DG-AP to submit a detailed report on a priority basis to the finance ministry to see whether the allegations of profiteering have any substance or not,” NAA official cited above added.

Meanwhile, the revenue department of finance ministry too, on its own is conducting a cost calculation of sanitary napkin manufacturing to see if the benefits from GST waiver have been fully passed on to consumers or not.

“There are instructions to issue notices to companies which are noncompliant,” a finance ministry sources said.

It was on July 21 when GST Council had exempted Sanitary Napkins from any taxes, bringing down the levies from 12 percent to 0 percent.

Finance ministry officials involved in this calculation say that the waiver of GST on sanitary napkins should lead to a minimum of 10 percent price reduction, however the manufacturers have said the price cut is negligible due to various factors such as different input costs.

First Published:Aug 21, 2018 10:09 PM IST