GST Council revises tax rates on fertilisers, exclusive tractor parts

Shree Pushkar Chemicals & Fertilisers Q1 | Profit at Rs 1.01 crore versus Rs 6.35 crore, revenue at Rs 63.8 crore versus Rs 92.1 crore YoY. (Image: Reuters)

Just a few hours before the country welcomes Goods and Services Tax (GST) in Parliament, the government has revised rates under the new tax regime for certain products.

The GST Council on Friday decided to reduce GST rate on fertilisers to 5 percent from 12 percent and on exclusive parts of tractors to 18 percent from 28 percent.

Union Minister for Chemicals and Fertilizers and Parliamentary Affairs Ananthkumar said that the decision to cut GST rates on fertilisers was primarily taken in the interests of the farmers.

“The government has also taken up with the industry to pass on the benefit to the farmers”, the Minister said.

Ananthkumar said that farmers would benefit to the tune of Rs. 1261 crores under the GST regime. Under the new rates announced by the GST Council, the average weighted maximum retail price (MRP) will decrease to Rs. 5909 a tonne (or Rs. 295.47 per 50kg bag) as compared to the existing all-India weighted average of Rs 5923 a tonne (or Rs. 296.18 per 50 kg bag).

After GST, there will be a uniform MRP of Rs.295.47 per 50 kg bag across the country except couple of states where additional value added tax (VAT) is charged on natural gas as it gas has not been brought within GST.

Even in these states, MRP will reduce by Rs 3 per 50 kg bag. Similarly, MRP of P&K Fertilisers, for which the prices are not administered, are also expected to come down on an average basis as the incidence of tax will be lower than the existing tax on an average, the minister said.

“The GST regime, apart from integrating the entire fertilizer market into a single market, will also deter inter-state smuggling of fertilizers which may be currently happening due to differing levels of taxes and consequently MRPs in different adjoining States,” an official statement said.