“ABC Pharma” have alleged that the Department of Goods and Services classifying alcohol based hand sanitizers as ‘disinfectants’ to extract 18 percent Goods and Services Tax (GST) from the present 12 percent.

Alcohol based hand sanitizers have always been classified as “Medicinal Preparation” being manufactured under drug license obtained under the Drug and Cosmetics Act 1940. After the introduction of GST in the country, the industries manufacturing this product under the Drug License began to pay GST at 12 percent as alcohol-based hand sanitizers are classified as “Medicaments” under heading 3004 of the HSN classification.

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”However, it is unfortunate that the Department of Goods and Services has of late started classifying “alcohol based hand sanitizers” under HSN heading 3808 as “Disinfectants” in order to extract GST at the rate of 18 percent from the manufacturing Industries,” Communicated by company head. The company head further said that the department has initiated raids and visits to industries that charge 12 percent GST as per the license obtained.

“Mostly “disinfectants” as a word is more applicable to products meant for use in animals, herbs, fungi & plant-oriented products, which is of a different class than the “alcohol-based hand sanitizers” which are for human use and come under the “Medicinal Products” category. Even if there is a change in the taxation policy with the introduction of the GST regime with effect from July 1, 2017, it cannot change the basic character of a product which is a medicinal preparation and remains as such,” Company head explained.
”Infact, in this pandemic era where “alcohol-based hand sanitizers” are a must for protection & security of the countrymen, there should have been an attempt to lower the GST rates, thereby making the product more viable for all sections of the society,” he opined.

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Company head further sought an immediate corrective step Goods and Services department to ensure that “All alcohol-based hand sanitizers” continue to be under heading 3004 of the HSN classification and further to stop any action being initiated against manufacturing units with drug license under” Medicaments” who are charging/paying 12 percent GST