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After furore, Customs Department removes punitive tax on laboratory chemicals

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After furore, Customs Department removes punitive tax on laboratory chemicals

The Finance Ministry has clarified that all imported ‘laboratory chemicals,’ except denatured ethanol, will be taxed at 10% instead of 150% as was first proposed in the Union Budget

Image used for : M. Moorthy

Image used for : M. Moorthy
| Photo Credit: M. Moorthy

In a relief to scientists and researchers across the country, the Finance Ministry has clarified that all imported ‘laboratory chemicals,’ except denatured ethanol, will be taxed at 10% instead of 150% as was first proposed in the Union Budget of July 23.

Imported laboratory chemicals are a critical component of research in nearly every domain of science. They include reagents and enzymes are usually extremely specific and not mass-produced, making them expensive and a significant overhead on the budget that scientists get for planning their research.

The Customs department defines laboratory chemicals as “all chemicals, organic or inorganic, whether or not chemically defined, imported in packings not exceeding 500 gm or 500 millilitres and which can be identified with reference to the purity, makings or other features to show them to be meant for use solely as laboratory chemicals.”

Seek clarification

As The Hindu reported this week, several scientists went into a tizzy after companies that supply these chemicals informed them they would now have to pay 1.5 times the usual rate for their goods. Senior scientists wrote to funding agencies such as the Ministry of Science and Technology, asking for clarification on the new rate and even, if the Budget documents, had actually made a misprint by writing 150% instead of 15%.

As it emerged, this wasn’t a mis-print. The Customs department had hiked its rates allegedly to reign in imports of ethanol that were being brought in as ‘laboratory chemicals’ to avoid the customs duty of 150%. There are broadly two kinds of ethanol. Ethanol, of varying grades, sourced from grain and used in the manufacture of alcohol and, ‘denatured’ ethanol, which is ethanol mixed with additives and unfit for consumption. The latter also comes in grades but is used in laboratories and in commercial applications.

Scientists told The Hindu that the denatured alcohol is made by several ‘local manufacturers and doesn’t need to be imported.

However, the Finance Ministry notification also states that any laboratory chemical imported needs to be accompanied by a letter that says the goods will only be used in a laboratory and for research and not further traded for commercial gains.

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