Hand sanitizer makers are committing massive GST theft! Revenue Department warns

• Revenue department says that sanitizer attracts 18% GST
• But many manufacturers are stealing tax by placing it in the second category.

The Director General of GST Intelligence (DGGI) has warned Goods and Services Tax (GST) officials that companies making alcohol-based sanitizers are committing massive tax evasion.

How tax evasion is being done

In a letter to all the Principal Chief Commissioners and Chief Commissioners of GST, the GST Intelligence Unit has said that some sugar mills and distilleries are manufacturing and supplying alcohol-based hand sanitizers. They are categorizing this GST into HSN Code 3004 which attracts only 12 per cent GST, while the sanitizer comes under HSN Code 3808 which should attract 18 per cent GST.

GST of 18 per cent on sanitizer

The GST Intelligence Unit says that medical and therapeutic use items fall under 12 per cent GST, while fungicides, pasticides, biodiesel etc. attract 18 per cent GST. Sanitizer comes under another category. In this letter, DGGI has indicated that GST has been stolen in a big way due to misclassification of sanitizer in this way.

DGGI has also identified 62 manufacturers and suppliers who are selling it through Amazon, Flipkart, Snapdeal, Paytm etc.

Significantly, the government has removed masks and sanitizers from the list of essential goods. The Indian Medical Device Industry (AiMeD) wrote a letter to the secretary of the Consumer Affairs Department, which said that cases of corona virus are increasing in the country. In such a situation, 2-3 ply masks should be kept in the list of essential goods for the next 6 months. However, a review was made about the sanitizer. But bypassing this advice, a new list was released by the government on July 1, which did not include sanitizers and masks.

The demand for masks and sanitizers increased in the country as soon as the corona virus crisis occurred. Given this, the government included them in the list of essential goods in March, when the price of 100 ML sanitizer was asked not to be raised above Rs 100. There is a ban on any kind of black market by being included in the list of essential goods.