Entire World including India is currently grappling with COVID-19 pandemic. During our fight with this deadly virus and to prevent its spread , hand sanitizers play an important role.
In regard to GST on sanitisers a shocker has been given by Directorate General of GST Intelligence (DGGI) through an internal clarification, wherein they have clarified that GST @ 18% is applicable to the Hand Sanitizer and not 12% of GST. The above clarification is based on information provided to DGGI by the Central Economics Intelligence Bureau (CEIB).
The Bureau had informed DGGI that Sugar Mills and distilleries are also engaged in manufacturing or supplying alcohol-based hand sanitisers and are classifying the same under tariff heading 3004 (12% GST) of HSN whereas the same is correctly classifiable under heading 3808 (18% GST) of HSN. Thus, the mis-classification of Hand sanitisers’ (Alcohol-based) appears to have resulted in substantial evasion of GST.
It was stated by Bureau that these sanitisers has ingredient such as Ethyl Alcohol I.P , Glycerol I.P, Hydrogen Peroxide I.P , Purified water etc. Hand sanitisers having ethyl alcohol as ingredient is a alcohol based product and correctly classifiable under heading 3808 of HSN. The active ingredient of Ethyl Alcohol I.P is over 70% in most of the cases.
Further Bureau also drew attention of DGGI to the opinion of World Customs Organisation (WCO) a nodal organisation for determining classification of merchandise goods based on Harmonised Commodity Description and Coding Systems. It is pertinent to mention here that in its opinion , the WCO has inferred that Alcohol based hand sanitisers are correctly classifiable under heading 3808 of HSN (precisely under sub heading 3808.94)
Intelligence furnished by the CEIB has been further developed in the DGGI Hqrs. A list of 62 manufacturers/suppliers of above said the item was prepared by the DGGI Headquarters by identifying the manufacturers with the help of the online shopping platforms, such as Amazon, Flipkart, Snapdeal, Paytm, etc. and has been analyzed in DGGI,” the letter of DGGI said.
“While the misclassification of Hand Sanitizers produced under various established brands is being looked into by various Zonal Units of DGGI, it is requested that misclassification of Hand Sanitisers manufactured/supplied by sugar factories/distilleries in your jurisdiction may kindly be verified at your end in order to plug any revenue Images,” the DGGI requested to the Principal Commissioner / Commissioner, CGST & CX, All Zones.
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