tax department news: sanitizer companies on hit list of tax department know the reason: sanitizer companies on hit list of tax department, know what is the matter

tax department news: sanitizer companies on hit list of tax department know the reason: sanitizer companies on hit list of tax department, know what is the matter

Highlights:

  • Tax department eyes on many companies making hand sanitizer
  • Accused of showing items in wrong category and not paying tax
  • DGGI, the investigation wing of the indirect tax department, started investigation in this matter.
  • Tax department eyes on hundreds of companies in Gujarat and Maharashtra

New Delhi
During the Corona period, the demand for hand sanitizers increased a lot in the country and the companies making them became silver. But the Tax Department is keeping an eye on many companies making hand sanitizer and its associated raw material. These companies are accused of showing the items in the wrong category and did not pay the tax. The question is whether sanitizers should be considered as medicines or disinfectants or consumer products. Medicare attracts 12 per cent GST, while disinfectants or consumer products attract 18 per cent.

Medicaments are broadly classified as drugs under the GST framework. In this, such things have been kept which can be used as medicine or are used to make medicine. Disinfectants, on the other hand, are soaps or liquids that are used as soap.

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what is the screw
Pharma companies say that sanitisers are medicinals while tax officials consider it to be disinfectants. The Director General of GST Intelligence (DGGI), the investigation arm of the Indirect Taxes Department, has started an investigation in this matter and notices have also been sent to some companies. ET has seen this notice. In this, the DGGI has said that medicines contain mixed or unmixed products for treatment.

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Companies making hand sanitizers argue that it is very important in the fight against Kovid-19 and hence it is similar to medicines. Therefore, it should be taxed at 12 per cent. Some pharma companies of Gujarat had approached the Supreme Court in this matter. The Supreme Court had asked him to approach the High Court. According to sources, the tax department is keeping an eye on hundreds of companies in Gujarat and Maharashtra.

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Looking at multiple companies
These include companies making sanitizers or similar products or companies manufacturing raw materials for such items. After the onset of the Corona epidemic, many companies started making hand sanitizers. DGGI is also eyeing pharma and other companies that supply disinfectants to hospitals.

These companies say that they are claiming lower GST rates even before the pandemic. DGGI officials say that most of these products are liquids that are used to sanitize hospitals. These are like hand sanitizers and come under the higher GST category.

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