GST Rate on Hand Sanitizer- Whether ambiguity removed or just installed (Happy GST Series -4) by CA Rajender Arora
The much disputed matter throughout the social media or print media is what exactly the rate of tax
applicable on Hand sanitizers is. Many views are coming to the picture based on classification of
the same i.e. whether the shall fall under HSN 3004 which charges 12% rate of tax or under the
HSN code 3808 with 18% rate of tax. At this point two events needs mention:
1. “Springfields (India) Distilleries went before the Goa AAR regarding clarifying the issue and
raised two questions:
a. Is Hand Sanitizer is covered under following HSN Code & rate 30049087
–Antihypertensive drugs: Antibacterial formulations not elsewhere specified or
included HS Code and Indian Harmonized System Code. The rate of GST is 12%?
Reply by AAR: Hand Sanitizer manufactured is that of alcohol-based category, it shall
be classified at 18% rate of tax under the HSN Code 3808.
b. The Ministry of Consumer Affairs, Food, and Public Distribution, in a notification
CG-DL-E13032020-218645, has classified Hand Sanitizers under the Essential
Commodities Act, 1955 as an essential commodity and thus exempt from GST
Reply by AAR: AAR upfront rejected to accept any notification issued by Ministry of
Consumer affairs, thereby quoting the exemption notification under GST mentioning that
GST law has separate exemption notification and mere classifying it as essential
commodity cannot consider it exempted.
Thus, concluding thereby that hand sanitizer attract 18% GST rate and classifiable under
HSN code-3808.
2. In the chain of events, CBIC issued a press release dated 15 th July 2020 expressed its view
on the issue thereby classifying the hand sanitizer under HSN code 3808 taxable @18%.
Key points from the press release:
a. Hand Sanitizer is Disinfectant like soaps anti-bacteria liquids, Dettol’s etc. which
attract standard rate of 18% under the GST regime.
b. They also mentioned that inputs in manufacturing the same is chargeable @18% so
reducing the output rate is never an agenda as it would attract Inverted duty structure
concept.
Our Remarks: The press release do not have any legal sanity in law. Now coming to Goa AAR
ruling, this has been in question on various matters. According to our view the hand sanitizer
should likely to be classified under HSN 3004 thereby attracting rate of tax @12%. While we are
writing, it is learned that a manufacturer of alcohol based sanitizers from Ahmedabad has gone to
Apex Court. Now the courts would be getting involved to provide final reach to the issue.
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