The Authority for Advance Ruling has said that alcohol-based hand sanitisers will be taxed at 18% Goods and Services rate. The Goa-bench of the AAR added that merely classifying goods as essential commodity will not be the criteria for exempting them from GST.
Springfield India Distilleries had sought an advance ruling on the classification of hand sanitisers supplied by the company and the applicable GST rate. The company also sought to know if sanitisers would be exempt from GST as it is classified as an essential commodity as per the notification of Ministry of Consumer Affairs.
In its ruling, the AAR said a 18% GST would be levied on all alcohol-based hand sanitisers. Although the Ministry of Consumer Affairs has classified hand sanitisers as an essential commodity, the GST law has a separate list of exempted goods, the authority said.
EY Tax Partner Abhishek Jain said the ruling is in line with the stand taken by the GST authorities. “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,” he added. “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.”
Last month, the Central Economic Intelligence Bureau had alerted GST authorities about manufacturers of alcohol-based hand sanitisers paying 12% GST by classifying them as medicaments. The AAR said general alcohol-based sanitiser without any creative or preventive ingredients may not be considered as medicament.
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