Government slashes GST rates on fertilisers from 12%-5%

New Delhi : Just hours ahead of the roll-out, the Goods and Services Tax (GST) Council on Friday slashed the rate on fertiliser from 12%-5% and on exclusive parts of tractors from 28%-18% in a bid to relieve the burden on farmers.

Finance Minister Arun Jaitley and his ministry officials disclosed this information after the Council meeting here, ahead of the roll-out of the new indirect tax regime.The reduction of tax on fertiliser alone will benefit farmers to the extent of Rs 1,261 crore, Fertiliser Minister Ananth Kumar said.

"In today's meeting of the GST Council, some additional set of rules have been approved and there was one major decision which was in response to a number of representations against the 12% former rate of GST on fertiliser," Jaitley said. 

"Some felt that it may increase the burden on the farmer itself and therefore a consensus was taken. The consensus of the Council was to bring the rate down to 5% so that the fertiliser prices come down, it doesn't go up," he added.

Kumar said the reduction in the fertiliser rate was taken in the interest of the farmers. Under the new GST rates announced by the Council average rated maximum retail price (MRP) will decrease to Rs 5,909 per ton (or Rs 295.47 per 50 kg bag) as compared to the existing all-India weighted average of Rs 5,923 per ton (or Rs 296.18 per 50 kg bag). 

Consequent to the ushering in of the GST regime, there will be a uniform MRP of Rs 295.47 per 50 kg bag across the country except a couple of states where additional VAT is charged on the natural gas which has not been brought under GST. However, he said, even in these states MRP will reduce by Rs 3 per 50 kg bag. 

Kumar said this measure apart from integrating the entire fertiliser market into a single market will also deter inter-state smuggling of fertilisers, which may be currently happening due to differing levels of taxes and consequently MRPs in different adjoining states. 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 government has taken up with the industry to pass on the benefit to the farmers.History will be created with the launch of GST in the country as it will be a platform for the alleviation of miseries of farmers and poor, he said.

He also said that the pharmaceutical manufacturers have been asked not to pass on the marginal increase in the price of some drugs to the consumers immediately.