Alcohol based hand sanitizers to be levied with 18% GST

July 15, 2020: A GST of 18 percent will be levied on alcohol-based hand sanitizers, the Authority for Advance Ruling (AAR) has said.

DY365
DY365

July 15, 2020: A GST of 18 percent will be levied on alcohol-based hand sanitizers, the Authority for Advance Ruling (AAR) has said.

Amid the ongoing debate over GST rate on hand sanitizers, the Goa bench of the GST Authority of Advance Ruling (AAR) has held that the alcohol-based hygiene product will attract 18 per cent GST. It added that its classification as an essential commodity cannot be a criteria for exemption from GST. 

Springfield India Distilleries had approached the Goa-bench of AAR to seek classification of hand sanitizers supplied by the company, and contended that the product is taxed at 12 percent.

The AAR, in its ruling, said since hand sanitizers manufactured by the applicant are of the category of 'alcohol-based hand sanitizers', an 18 percent GST would be applicable.

The authority further said although the Ministry of Consumer Affairs has classified hand sanitizers as an essential commodity, the GST law has a separate list of exempted goods.

EY Tax Partner Abhishek Jain said the ruling is aligned to the view taken by GST authorities as well of a rate of 18 per cent being applicable on hand sanitisers. 

Jain said the classification of hand sanitisers has been a matter of debate since inception, especially given the multiple entries in which it could warrant classification because of its composition and uses. 

“Given its significance during the pandemic and with multiple players now into manufacturing of this product, the government should consider issuing an explicit clarification to control unwarranted litigation on this aspect,” he added.

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