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18% GST on Alcohol Based Sanitisers : AAR

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The outbreak of coronavirus spiked up the demand for hand sanitizers throughout the world pushing it to become an essential commodity. The Authority of Advanced Rulings (AAR) stated in a ruling that a GST of 18% will be levied on all alcohol-based hand sanitizers.

Goa Bench, AAR was approached by Springfield India Distilleries to seek classification of hand sanitizers supplied by the company and contended that the product is taxed at 12%. The company also sought to know if the product will be taxed at all as it has become an essential commodity. To which, AAR ruled, since the hand sanitizers manufactured by the applicant are of the category of ‘alcohol-based hand sanitizers’, an 18% GST would be applicable.

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

EY Tax Partner Abhishek Jain said, “the ruling is aligned to the view taken by GST authorities as well of a rate of 18 percent being applicable on hand sanitizers. The classification of hand sanitizers 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.”

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“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 further.

It should be noted that alcohol-based sanitizers have been recommended ever since the corona commenced casting its wrath and the move by AAR may pose as a hurdle for the financially weaker stratum of the society in the battle against the pandemic and to safe living.

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