GST Council Meet: After months of outrage over not making sanitary napkins tax exempt, like bindi, sindoor, and kajal, the GST Council may finally consider tax cut on it when it meets on July 21.\u00a0The GST rate on sanitary napkins is 12% now, and could be brought down to 5%. However, contrary to popular mood, this essential item should not be made GST exempt, say experts. Given the peculiar nature of the 'inverted tax structure' under the Goods and Services Tax regime, GST exemption becomes costlier for manufacturers than a low or 0% tax rate slab on items that use raw materials taxed at higher rate. Interestingly, under the GST, 0% tax rate works differently from tax exemption. Under 0%, there is no output tax but input tax credit can be claimed, while under tax exemption, the provision of claiming credit is not there. FE Online had earlier explained how the calculation works under the Inverted Duty Structure:\u00a0How no tax in GST regime becomes costlier than 5% slab. Same is the case with sanitary napkins. GST attorney L Badri Narayanan, a Partner at Lakshmikumaran & Sridharan told FE Online that tax exemption leads to break in the credit chain, eventually leading to higher cost and sale price of the goods. This could make the situation worse in India where only 12% women use sanitary napkins. "If I have to compare the situation of a zero tax rate on sanitary napkins with a lower rate of tax, I will opt for the latter. This is because once a product becomes completely exempt, the dealer of such goods loses the input tax credit on all the input goods and services. This leads to a situation of a break in the credit chain which eventually results in an increase in the cost and sale price of the goods,"\u00a0Badri Narayanan said. More importantly, making it tax-exempt is likely\u00a0to hurt domestic manufacturers as they are the ones to manufacture sanitary napkins under the GST mechanism, while foreign manufacturers taxed at 0% would be able to claim input tax credit. Despite all the technicalities, and even as in the earlier regime sanitary napkins were taxed at 13.7%, there is room to bring it down in the lowest bracket of 5%,\u00a0Kabir Bogra, Indirect Tax Partner,\u00a0Khaitan & Co recently said. The GST, since its implementation on July 1, 2017, has been heavily criticised for being too complex and for having too many tax slabs. Grouping of items, such as sanitary napkins with\u00a0toys, leather goods etc at 12%, is posing a problem. Similarly, washing machines, refrigerators are clubbed with aircraft and yachts at 28%. However, once the GST revenue settles at a comfortable level, the government would be able to address these technical issues, where an exception could be made for essential goods such as sanitary napkins, books, wheelchairs to be tax exempt with breaking the credit chain, say GST experts. The GST Council may also consider lowering tax on handicrafts and handloom goods, also taxed at 12%, along with some services in the meeting. In November 2017, the council had cut rates on over 200 items, followed by a rate cut of 29 items two months later.