Alcohol-based hand sanitisers to attract 18% GST, says Authority for Advance Ruling

Guwahati: The Authority for Advance Ruling (AAR) has announced that a GST of 18 percent will be levied on all alcohol-based hand sanitizers.

As per reports, the ruling came in the case of Springfield India Distilleries which had approached the Goa bench of AAR to seek classification of hand sanitizers supplied by the company and its contention was that a 12% GST had been attached to the hand sanitizer.

The company also sought to know if sanitizers would be exempt from GST as it is an essential commodity amid the pandemic. The Goa bench of AAR in its ruling stated since hand sanitizers manufactured by the company are of the category of 'alcohol-based hand sanitizers', an 18% GST would be applicable.

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

It is to be mentioned that the ruling comes at a time when the GST administration is probing into the allegation that some manufacturers, including alcohol-based hand sanitizer makers, are indulging in tax evasion/non-payment of GST by misclassifying the product. An official reported that misclassification appears to have resulted in substantial evasion of GST.

Experts assert that since it was classified as an essential commodity due to the COVID-19 pandemic and given that the pandemic is ongoing, the government will have to provide clarification on the taxation of the product.

Notably, the AAR is consistent with the view taken by GST authorities as well of a rate of 18% being applicable to hand sanitizers.

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