The Authority for Advance Ruling (AAR) has said that a GST of 18% will be levied on all alcohol-based hand sanitisers.
Springfield India Distilleries had approached the Goa-bench of AAR to seek classification of hand sanitisers supplied by the company, and contended that the product is taxed at 12%.
It also sought to know if sanitisers would be exempt from GST since it is now an essential commodity.
The AAR, in its ruling, said since hand sanitisers manufactured by the applicant are of the category of 'alcohol-based hand sanitisers', a 18% GST would be applicable.
The authority further said that although the Ministry of Consumer Affairs has classified hand sanitisers as an essential commodity, the GST law has a separate list of exempted goods.
EY Tax Partner Abhishek Jain said the ruling is aligned to the view taken by GST authorities as well of a rate of 18 per cent being applicable on hand sanitisers.
Jain said the classification of hand sanitisers has been a matter of debate since inception, especially given the multiple entries in which it could warrant classification because of its composition and uses.
"Given its significance during the pandemic and with multiple players now into manufacturing of this product, the government should consider issuing an explicit clarification to control unwarranted litigation on this aspect," he added.