Council Should Consider Lowering Tax On Household Insecticides To 5 PC EY Hica Report The Economic Times
EY-HICA report recommends reducing GST on household insecticides from 18% to 5% to improve affordability and public health.
The GST Council is facing calls to consider a significant reduction in the GST rate on household insecticides, potentially slashing it from the current 18% to 5%. This recommendation stems from a joint report by EY and the Home Insect Control Association (HICA), highlighting the critical role these products play in combating vector-borne diseases like malaria, dengue, and chikungunya. The report emphasizes that the existing high tax rate disproportionately affects low-income and rural households, hindering their access to essential preventive healthcare. The Indian household insecticide market has grown from ₹7,147 crore in 2023 to ₹8,138 crore in 2025, with urban areas showing 92-99% penetration compared to 64-73% in rural areas. Reducing the GST could lead to increased affordability and usage, particularly in rural regions, strengthening the nation's preventive healthcare system.
Section 9 of the CGST Act, 2017, empowers the government to levy GST on intra-state supplies of goods and services. The GST Council's recommendation to reduce the rate on insecticides would require a notification amending the existing rate schedule. Businesses must ensure accurate classification and application of GST rates to avoid penalties under Section 122 of the CGST Act.
From a tax perspective, reducing the GST rate may lead to an inverted duty structure, potentially causing ITC accumulation for manufacturers. However, the public health benefits and increased consumption in rural areas likely outweigh these concerns. Taxpayers should analyze potential ITC implications and ensure accurate reporting in GSTR-3B.
A lower GST rate can make these essential products more affordable, especially for vulnerable populations, and reduce the risk of vector-borne diseases. It also addresses the anomaly where essential health products have lower GST rates while insecticides remain highly taxed.