India GST rollout: GST Council cuts tax on fertilisers to 5 per cent
Jul. 3, 2017
- GST on raw materials may hit fertilizer output, boost imports
- Higher GST on pesticide to affect Indian farmers
- With fertiliser/pesticide prices set to rise, Punjab, Haryana farmers seethe
- India agri input firms' short-term margins to remain under pressure on price cut
- Indian pesticide dealers shut shops to protest proposed high GST rate
- India farmers may be hit by higher GST rate on agro-chemicals
- India GST supply crunch: Fertiliser, pesticide pipeline turns dry ahead of sowing
Jaitley said the decision to reduce the tax rate on fertiliser was taken because of apprehensions that price of the crop nutrient may go up. In another move related to farmer’s relief, the GST Council, which comprises of representatives of each and every state, decided to cut tax rate on exclusive parts of tractors from 28 per cent to 18 per cent. The GST Council meeting was called as a thanks giving meet with no formal agenda. However, understanding the sensitivity of issues related to farmers, the Council decided to take some decisions. The fertiliser industry had been making several representations to the Ministry of Chemicals and Fertilisers for revision in the GST stating that a high rate of 12 per cent would upset farmers as it can increase their cost of production.
Ultimately, the fertiliser ministry took up the issue with the finance ministry, which then decided to put the proposal before the GST Council. On Friday, Prime Minister Narendra Modi attended a dinner for the GST Council members as a special thanks giving for the decisions the panel took since its formation in September last year. Since its first meeting on September 23, 2016, the Council has met 18 times and decided on range of issues — from drafts of supporting legislations to GST rules, rates of taxes and fitting over 1,200 goods and services in the four-tire structure of 5 per cent, 12 per cent, 18 per cent and 28 per cent.
Jaitley said the Council meeting also approved additional set of rules. He did not elaborate on the issue. The GST, which unifies more than a dozen central and state levies like excise duty, service tax and VAT, was implemented at midnight. After Council’s announcement, Union Chemicals and Fertilisers Minister Ananth Kumar said that fertiliser prices will come down marginally with GST rate being slashed to 5 per cent from 12 per cent., he added. “The reduced GST rate will bring down burden on farmers by Rs 1,261 crore… Prices of urea, DAP, MoP, and mixed fertilisers will come down marginally,” he said.
The GST council did not reduce the rate of 18 per cent on crop protection chemicals. On Friday, CropLife India, a consortium of 14 agrochemical firms operating in India, demanded that the government reduce the GST rate of 18 per cent on crop protection chemicals, saying the high rate will burden farmers. Rajshekhar Sakhalkar, Director of CropLife India, said that GST introduction has left farmers “confused and worried” despite a good monsoon.