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Clarification on GST Rate on Alcohol-based Hand Sanitizers

Clarification on GST Rate on Alcohol-based Hand Sanitizers

Ministry of Finance (MoF) vide its Press Release dated 15th July 2020 issued "Clarification on the issue of GST Rate on Alcohol-based Hand Sanitizers". This Clarification seeks to declutter the issues surrounding the Alcohol-Based Hand Sanitizers since many representations were made to MoF seeking exemption from GST for the Hand Sanitizers being essential goods in the times of Covid-19 Pandemic. This Clarification has finally put to rest the misinformation about the applicability and rate of GST.

A Recent AAR Ruling issued on 29th June 2020 by Goa Authority for Advance Ruling prescribed a rate of 18% for Alcohol-Based Hand Sanitizers by categorizing them under HSN Code 3808. However, the limitation of the applicability of AAR Ruling still made the issue unresolved for the Industry.

Thus, with this clarification, MoF has made it clear that hand sanitizers shall attract the rate of 18% under GST. It also clarified that Inputs for manufacturing Hand Sanitizers are chemical packing material, input Services, which also attract a GST rate of 18%. Reducing the rate of GST on Hand Sanitizers would lead to an inverted duty structure and put the domestic manufacturers as well as importers at a disadvantage. The Lower GST Rate helps imports by making them cheaper. Consumers would also eventually suffer from lower GST rates if domestic manufacturing suffers on account of an inverted duty structure. 



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