Companies making hand sanitizers on IT's radar

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New Delhi: Demand for hand sanitizers has soared in the country during the Corona era and its makers have gone bankrupt. But some companies that manufacture hand sanitizers and related products have caught the eye of the tax department. These companies are accused of misrepresenting things and not paying taxes.

The question is whether the sanitizer should be considered a medicament or a disinfectant or consumer product. Medicare is subject to 18 per cent GST while disinfectants or consumer products are subject to 18 per cent.

Medicamants under the GST framework are widely classified into categories of drugs. In this, things are kept that can be used as medicine or used to make medicine. Disinfectants are soaps or liquids that can be used as soaps.

Pharma companies say that sanitizers are medicaments while tax authorities consider them disinfectants. The Director General of GST Intelligence (DGGI) of the Investigation Branch of the Indirect Tax Department has started an investigation into the matter and has also sent notices to some companies. In the notice, the DGGI said that medicaments contain mixed or unmixed products for treatment.

Companies that make hand sanitizers argue that it is very important in the fight against covid-18 and therefore it is similar to medicamaments. Therefore, it should be taxed at 12%. Some pharma companies in Gujarat had approached the Supreme Court in this regard. The Supreme Court asked him to approach the High Court. According to sources, the tax department is monitoring hundreds of companies in Gujarat and Maharashtra.

This includes companies that make sanitizers or similar products or companies that make raw materials for such items. Many companies began making hand sanitizers after the onset of the Corona epidemic. DGGI is also looking at pharma and other companies that supply disinfectants to hospitals.

These companies say that the epidemic is already claiming a lower GST rate. DGGI officials say most of these products are liquids used to sanitize hospitals. These are similar to hand sanitizers and come in the category of more GST.


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