GST Rates on agrochemicals be maintained at 18% to avoid distortion caused due to inverted duty structure

Date:02-08-2023

Crop Care Federation of India (CCFI) the largest manufacturers and exporters of agrochemicals while appreciating the proposed changes in budget have reiterated that the present GST of 18% on pesticides should be maintained as all the raw material, packing material, containers, plant & machinery levy GST of 18%.

″Any reduction would result in inverted duty structure which would be determined to indigenous manufacturers and formulators who have the capability and the capacity of   manufacturing quality pesticides rather than depend on imports″ stated Mr Deepak shah, Chairman,CCFI.

In a communication to Shri Vivek Joshi IAS Chairman, Central Board of Indirect Taxes & Customs, Ministry of Finance Mr. Harish Mehta, Senior Advisor CCFI has stated ″90% of the final products and services like security, safety, laboratory consumables, advertisement and publicity material are all charged at 18%.

The aim is to provide a balancing and seamless flow of credit and its utilization. It also avoids distortion due to inverted duty structure and problems related to adjustment of credit balance. It has been observed in the past that any relief in taxation once given remains unchanged, resulting in continuous loss of revenue linked with growth in the industry, With surge in imports touching 13369 Cr. during 2021-22 and likely to cross ₹15000 Cr. during the current fiscal, the  importers would have a distinct advantage against indigenous manufacturers and go against the policy through ‘Make in India’ towards Atmanirbhar Bharat.The MSME sector would be seriously affected impacting their operations.

Any reduction would result in loss of revenue estimated annually at ₹ 4500 Cr. besides blocking capital which would increase cost of business.

″At CCFI we work towards policy favoring farming community where our members can provide better quality than their imported counterparts at 30-75% lower cost and save valuable foreign exchange. It is also to be ensured by the government that the benefits of reduction in GST rates are passed on to the farmers by company and trade channel partners as normally the sales are made inclusive of tax component.In that case the cost reduction if at all becomes infructuous. We strongly recommend that there should not be any change in GST rates for pesticides manufactured  in India″ said Harish Mehta.