So finally after a round of whole lot of discussion, today we got a clarification from the Ministry of Finance that hand sanitizers are liable to GST at a rate of 18%
But what impresses us the most and at the same time amuses us the most is the reasoning that is provided for making it liable at 18%.
Importantly there are no discussions in regard to the HSN codes and the classifications of the sanitizer under various HSN codes but the reason given by the Press release is that it is in the best interest of Aatmnirbhar Bharat policy of the country and making a reduced rate would like will lead to inverted duty structure and thereby giving benefit to the foreign players as an edge over the domestic players
We are yet to figure out how is it against the Atmanirbhar Bharat Policy if consumers ultimately paying the price ! If you are able to know, please enlighten all of us also in the comment box below.
Text of Press Release (15 JUL 2020)
The issue of GST rate on alcohol based hand sanitizers has been reported in few sections of media. It is stated that hand sanitizers attract GST at the rate of 18%. Sanitizers are disinfectants like soaps, anti-bacterial liquids, dettol etc which all attract duty standard rate of 18% under the GST regime.
The GST rates on various items are decided by the GST Council where the Central Government and all the state governments together deliberate and take decisions. It is further clarified that inputs for manufacture of hand sanitizers are chemicals packing material, input services, which also attract a GST rate of 18%.
Reducing the GST rate on sanitizers and other similar items would lead to an inverted duty structure and put the domestic manufacturers at disadvantage vis-a-vis importers. Lower GST rates help imports by making them cheaper.
This is against the nation’s policy on Atmanirbhar Bharat. Consumers would also eventually not benefit from the lower GST rate if domestic manufacturing suffers on account of inverted duty structure.
(Release ID: 1638769)