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TEXT OF TECHNICAL RELEASE WITH LINKS
TEXT OF TECHNICAL RELEASE WITH LINKS
Response from stakeholders on the GST Council’s Media Release
dated 4 July 2017 - On GST rate for physically challenged persons
“Wrong on so many levels”
We, the undersigned represent key stakeholders of the disability community across India. The latest 2011 census shows that 2.2 % of the population - 26.8 million persons have some disability. This number is bound to increase considering the more inclusive definition given in the recently passed Rights of Persons with Disabilities Act 2016. Almost all of the Persons with Disabilities (PwDs) are dependent on one or more aid/appliance for activities of daily living and other activities like accessing education, employment, sports and recreation. The nature between poverty and disability is well known as well as the nature of its cyclical viciousness.
We are speaking with one voice to rebut the GST Council’s assertion via its media release that the imposition of 5% GST on aids and appliances is a ‘win-win’ situation for all concerned.
These are our submissions with linked annexures :
1) Usage of the word ‘concessional’ for the extant 5% GST rate is incorrect and misleading. Pre-GST, barring cars for physically handicapped, all the disability aids and appliances specifically mentioned were NIL (Excise + VAT).
2) The actual list of aids and appliances (on which exemptions have traditionally been based), seems to have been added to and modified over time, with little thought and less research, to form an incomplete, Exemption List 32 of Schedule 1 of the Customs Tariff Act.
3) This list was presumably overlooked when preparing the 18th May schedule of rates with the ensuing incomprehensible results to which no justification has been made till date.
4) Subsequent advocacy with the finance ministers of Kerala and Tripura and growing outrage at this taxing of hitherto exempt goods probably led the Government to declare in its 11 June schedule of changed rates that all the disabled products under list 32 "are already at 5% GST rate." Again, nowhere has this provision been found, though rates of 18% and 12% products have been brought down to a uniform 5% for all listed products.
5) From 11th June 2017 there has been no change in rates despite cross-country protests, petitions and representations leading to even the MSJE minister requesting these appeals be considered. All this went unanswered till Rahul Gandhi's tweet brought focus back to this issue and resulted in the 4th July press release referring to the 5% GST rate as 'concessional' given the 18% GST on raw materials which could further be claimed back as input tax credit by the manufacturer of the finished product ultimately assuring the consumer of reduced prices under the anti-profiteering component of the GST law. (It is pertinent to note that no such information on raw material requirements for this diverse range of products is available - indeed the need-based market analysis of India's requirement of aids and appliances has never been done.)
6) It is not surprising that errors continue at each iteration of the Government’s handling of this issue - instead of the apocryphal 18% rate for raw materials quoted, these too are exempted vide CBEC General Exemption No 50, Sl No 221, page 1260-1 declaring nil duty on
Aluminium extrusions, square tubes and round tubes of aluminium used in the manufacture of
(1) artificial limbs; or
(2) any of the following rehabilitation aids, namely:-
a. Somi brace
b. Ash brace
c. Taylor brace
d. Four post collars
e. Thumb splint
f. Finger splint
g. Axilla crutches
h. Elbow crutches
i. Walking frames
j. Wheel chair or tricycle components
k. Braille shorthand machine
l. Folding cane for blind
7) The same exemption notice not only reduces duty on ‘cars for physically handicapped’ to 6% (Sl no 280) but also declares nil duty on Sl No 150 b –
Tyres, flaps and tubes used in the manufacture of-
(b) two-wheeled or three-wheeled motor vehicles specially designed for use by handicapped persons
8) To indicate that input tax credit is the rationale for a government to deny nil duty for these goods is a particularly sorry example of half-hearted misdirection. Nil duty is the least a Government can provide its disabled citizens given the price they pay for being disabled and discriminated in a country of barriers and bias. Input tax credit is merely a by-product of the tax channels unification and weeding out of redundancy and the cascading taxes rife in the previous system.
To deny manufacturers of these essential goods their rightful claim of the ‘benefit’ of input tax credit / refund (on whatever raw materials have not been exempted thus far) is contradictory to the principles of natural justice. To ‘spin’ this disguised penalty into a so-called advantage of NOT being on nil duty, while conveniently omitting to mention that a slab of 0.25 % tax exists underscores the complete lack of thought and near total absence of empathy for a people who are struggling to break free out from poverty and multiple disadvantage caused by social and legal disabilities in addition to the pre-existing physical / mental disability.
9) Additionally, to claim protection of the domestic manufacturer in this market which has neither been properly analysed nor encouraged by way of planned investment, is opportunistic to say the least. The existing condition is that Indian manufacturing of so many essential assistive devices simply doesn’t exist. In such cases we are forced to import such equipment. These devices are expensive due to their import or due to import of components. Over and above this if we are going to add 5% import duty, then it is certain to increase the cost of these devices.
Example, Braille printer, refreshable Braille display and Braille note-taker, talking thermometer, talking weighing machine, talking scales, talking watches and clocks, Audio labelling devices, DAISY players, etc. are not made in India by any company or organization. All these items will need to be imported from outside. It may not be viable to manufacture all these items in the country because manufacturing in required quantities would not be sustainable. Cost of all such items will go up increasing financial burden on persons with disabilities. That is why we have had zero import duty on all tangible items made for persons with disabilities even if they were being imported by commercial entities.
We have also seen that if any of these products are manufactured in India, then the cost advantage could be much bigger than just 5% thus that protection would be unnecessary. For example, the imported Ultra Cane costs Rs. 70000 whereas the indigenous Smart Cane costs Rs. 3500.
Thus this explanation should not be seen as a justification to impose 5% GST on the aids and appliances for persons with disabilities. The ‘policy’ is in favour of someone who doesn’t exist as of now! The government’s claims to have the interests of the domestic manufacturer at heart is welcome, but the spiel must be accompanied by concrete steps to know the Indian manufacturers, build capacity by way of a technology incubator and extend existing indigenous manufacturers’ scattered production centres into a nation-wide network of assistive device distribution, customisation and servicing.
10) Given the fallacious argument that input tax credit cannot be applied for nil duty goods, it is the sector’s request that
I. The tax rate of products to be restored to earlier exempt status.
II. The benefit of input tax credit and refund to be passed on to the consumer by way of reduced price.
Since a list of these items have been worked out and are being used to impose tax, why can't the items on that list be given full input tax credit even if they pay 0 GST? All this requires is a net transfer from the government to offset the calculated input tax amount.
Indirect taxation experts have similarly opined that this segment be end-user exempted across the entire value chain for maximum relief to already burdened disabled consumer.
#WhyTaxDisability
The last time a body part was taxed in India, was with Nangeli in 19th century Kerala.
We continue to protest against this imposition of tax on our body parts and basic needs.
We vote with Braille-enabled EVMs at polling booths we reach with adapted vehicles.
The more fortunate among us pay income tax using assistive technology.
And with communication aids, we raise our voices in solidarity to protest injustice.
Independently.
This sudden, arbitrary decision to tax what was exempt all this while has caused more than 21 million people to acquire a new disability : the GST.
Seventy years after 1947 we are yet to get freedom from socially imposed barriers and burdens.
We the disabled people of India cannot be denied the natural and inalienable right to live independently and equally; like other Indian citizens.
#RollBackBackGst4PwDs
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