Disabled GST

“The GST on aids and appliances for persons with disabilities is a reminder of Nangeli’s act of severing her breasts in protest against the Mula Karam or breast tax levied on women from lower castes in Kerala in the early 19th century. This reference is ingrained in the minds of every Malayali for its sheer unjustness — taxing a body part.”

The GST on aids and appliances for people with disabilities has been compared to the infamous breast tax of Kerala by The Indian Express. They are trying to put forward the unfairness of taxing prosthetic arms and legs at 5% (which are kind of necessary for PWD) while kajal, kumkum, bindis and bangles are not taxed at all.  Moreover, gold and diamond – which are luxuries – will be taxed at just 3%. Apparently, a range of 5%-18% was proposed for these aids and was fixated at 5% only after the finance ministers of Kerala and Tripura intervened.

One cannot ignore the fact that the life of people with handicaps is riddled with difficulties. The daily tasks like walking that are seemingly natural to a healthy person are demanding for another who has to use crutches. The aids and appliances have a singular aim – to empower differently abled people so they can try to lead normal lives. Wheelchairs, hearing aids, Braille writers and papers, talking books and implants are needs of Person with Disabilities, not wants. In a country like India, any sort of handicap is viewed more as social problems rather than medical problem. Although the situation is slowly changing, gaining access to high-end appliances is expensive and rather wearing.

Having said that, exempting these aids under GST would not be a wise decision for multiple reasons. Firstly, 5% is the most beneficial tax rate under GST. Gold and diamond attract a levy of 3% but with the 18% making charges and custom duty at 10%, the effective rate comes to 15.67% as compared to the earlier effective rate of 12.43%.

Most of the raw materials and services used for making these aids are taxed at 18% and some sophisticated electronic inputs have been put in the 28% tax bracket. The suppliers can therefore claim an input credit for the tax paid on input. Additionally, since the tax rate on input is higher, the entire 5% levy on the aids will be offset against the input taxes. This will lead to zero effective tax on the items making them cheaper. In fact, the suppliers will have surplus credit available in his/her account as the tax on most inputs is significantly higher at 18%. The suppliers will be able to claim a cash refund for the credit remaining with them. If the appliances are exempt from tax, claiming tax credit on input would not be possible, thereby leading to an increase in the cost of these products.

An official statement also explained that if the equipment for the disabled is exempted from GST, the imports would continue to be at a zero percent duty. As a consequence, domestically manufactured devices and equipment would have to bear the burden of input taxes. This would mean an increase in the cost which would make the domestic products uncompetitive to their foreign counterparts. The government statement listed items that would draw concessional rates. Some of the items are:

-         Braille frames, slates, writing guides,

-         Braille Erasers,

-         External catheters,

-         Special jelly cushions (to prevent bed sores),

-         Stair lift,

-         Urine collection bags

-         Specially-adapted clocks and watches,

-         Electronic measuring equipment such as calipers, micrometers, gauges, rulers,

-         Assistive listening devices,

-         Audiometers,

-         Technical aids for education, rehabilitation.

Despite the accusations made by a certain person, the tax on aids and appliances for disabled isn’t insensitive. This move aims to give a boost to the domestic manufacturing of the devices and there would, hopefully, be a decline in the prices for such products.