In a recent order, the Karnataka bench of the GST Authority for Advance Rulings (AAR) observed that hand sanitisers were not a medicament. This makes hand sanitisers liable to a GST levy of 18 percent.

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Wipro Enterprises makes consumer products such as toiletries, soaps and bulbs. In the backdrop of the pandemic, Wipro had started production and marketing of hand sanitisers on a large scale. It is part of the Wipro Group, one of the tech giants in India. Last year in June, Wipro had approached the AAR to determine the suitable classification of hand sanitisers.

AAR informed that the product, which consisted of 95 percent ethyl alcohol and had acquired a drug licence, should be classified under chapter heading 3004. This chapter talks about medicaments with a therapeutic or prophylactic value. It mentioned several court verdicts and pointed out that hair oil used for killing lice, or iodine cleaning solutions had been considered medicaments.

Nevertheless, the AAR bench in its recent order held that hand sanitisers cannot be called therapeutic agent. This is because they do not consider a disease already prevalent in a patient.

Apart from this, this product cannot be thought of as prophylactic goods. This is due to the fact that it is not specific to any disease but is a substitute for soap. Moreover, it cannot be compared with Covaxin or polio drops. Hence, it is not a medicament and would be liable to 18 percent GST.

In July last year, the finance ministry had elucidated that sanitisers were disinfectants like soaps, anti-bacterial liquids and Dettol. This was done after the date of filing of the AAR application by Wipro.

Even then, the AAR had stated that a GST of 18 percent would be levied on alcohol-based hand sanitisers. Springfield India Distilleries had approached the Goa-bench of AAR on this matter and contended that hand sanitisers be taxed at 12 percent. In its ruling, AAR said that since hand sanitisers manufactured by the applicant were alcohol-based hand sanitisers, the 18 percent GST would be applicable.