'Essential Commodity' Alcohol-Based Hand Sanitisers To Attract 18% GST & People Aren't Happy
Due to the COVID-19 pandemic, hand sanitisers have become an essential commodity, and we have been told to use them frequently to keep ourselves from the deadly virus.
We have been asked to keep a bottle of hand sanitiser with us every time we step outside and it is likely to be our best precaution till a COVID-19 vaccine is available.?
But that safety could soon become a little more expensive as the Authority for Advance Ruling (AAR) has said that a GST of 18 per cent will be levied on all alcohol-based hand sanitisers.
The development came after Springfield India Distilleries approached the Goa-bench of AAR to seek classification of hand sanitisers supplied by the company, and contended that the product is taxed at 12 per cent.
It also sought to know if sanitisers would be exempt from GST since it is now an essential commodity.
The AAR, in its ruling, said since hand sanitisers manufactured by the applicant are of the category of 'alcohol-based hand sanitisers', a 18 per cent GST would be applicable.
The authority further said that 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 Finance Ministry issued a clarification saying that?sanitisers, that are disinfectants like soaps, anti-bacterial liquids, which all attract duty standard rate of 18% under the GST regime.
According to experts, 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," EY Tax Partner Abhishek Jain said.
Experts say that since it was classified as an essential commodity due to the Covid-19 pandemic and given that the Covid-19 pandemic is ongoing, the government will have to provide a clarification on the taxation of the product.
