Cosmetic Ayurvedic products should be charged GST rates for cosmetics, rules court

By

Isabelle Crossley

Published
Sep 21, 2022

The Telengana branch of the Goods and Service Authority for Advance Rulings held that Ayurvedic products manufactured for cosmetic use, even when produced with Ayush licenses, must be subject to GST rates for cosmetics and not medicaments.

The GST AAR held a case by Hyderabad-based business IncNut Lifestyle Retail, TNN reported. The business had obtained Ayush licenses for each of its Ayurvedic personal care products and thus expected the products to incur 12% GST, the rate for medicaments. However, the AAR ruled that all cosmetics products, including Ayurvedic cosmetics goods, must be subject to the 18% GST rate for cosmetics. The AAR ruled that the GST rate is determined by the purpose for which the products are intended to be used. 
 
In order to make its decision, the AAR referenced Supreme Court rulings and decided that, if the main function of a product is ‘care’ not ‘cure’, it cannot be classed as a medicament. The AAR ruled that cosmetic products are designed to enhance beauty and not treat any specific medial condition. 

With this criteria, the AAR classified some of IncNut’s products, including hair oils, and hair conditioners, as cosmetics. However, it classed the business’ oral care oil as a medicament as it is designed to help with ailments including tooth sensitivity and plaque.