GST COUNCIL CUTS TAX RATE ON FERTILISER TO 5 PER CENT
Hours before the Goods and Services Tax was rolled out on midnight of June 30, the allpowerful GST Council reduced the tax rate on fertiliser to 5 per cent from previously decided 12 per cent. Finance Minister Arun Jaitley, who heads the GST Council comprising representatives of states, said the decision to reduce the tax rate on fertiliser was taken because of apprehensions that price of the crop nutrient may go up. The GST Council, in another move to give relief to farmers, also cut tax rate on exclusive parts of tractors from 28 per cent to 18 per cent. "Some felt it (12 per cent GST rate) may be a burden on consumer. There was a consensus (in the GST Council) to bring rate to 5 per cent," he told reporters after the 18th meeting of the Council. The Council meeting was called more as a thanks giving meet with no formal agenda. But it did take up the cause of farmers at the meeting. 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 1200 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 reduced GST rate will bring down burden on farmers by Rs 1,261 crore, Chemicals and Fertilisers Minister Ananth Kumar said. "Prices of urea, DAP, MoP, and mixed fertilisers will come down marginally with reduction in GST rate from 12 per cent to 5 per cent," he said. Kumar claimed that the reduced GST rate on fertilisers will help in bringing prosperity in rural areas. "I feel the GST, which is going to be unfolded is focused on goan, garib and kisan. A new history been created again with GST rollout," he added. Post GST, the average weighted MRP will decrease to Rs 5,909 per tonne (or Rs 295.47/50 kg bag) as compared to the existing all-India weighted average of Rs 5,923 per tonne (or Rs 296.18 per 50 kg bag. Under the GST regime, there will be a uniform MRP of Rs 295.47 per 50 kg bag across the country except few states where additional VAT is charged on natural gas. However, even in these states MRP will reduce by Rs 3 per 50 kg bag. Similarly, the 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. The government has asked the industry to pass on the benefits to farmers. The GST Council today reduced the GST rate on fertilisers to 5 per cent from 12 per cent because of apprehensions of rate of crop nutrient going up. At present, taxes on fertilisers are in the range of 0-6 per cent in different states. Retail price of urea, which is fixed by the government, is at Rs 5,360 per tonne now. The prices of DAP and potash, fixed by private companies, are at Rs 22,000 and Rs 11,000 per tonne, respectively. The GST, which unifies more than a dozen central and state levies like excise duty, service tax and VAT, was implemented from midnight of June 30. The GST Council will review the implementation of the Goods and Services Tax as also levies on some of the items on August 5. "The review meeting of the GST Council would be on the first Saturday of August," Central Board of Excise and Customs Chairperson Vanaja N Sarna told PTI. The meeting will take stock of the implementation of the biggest tax reform since independence and also review tax rate with regard to any commodity highlighted by members in the meeting, she said. She ruled out any glitches in the rollout and said various steps have been taken to spread awareness about the new taxation system. "It is good and simple tax and it is good from all aspects. So, many taxes, 17 taxes going into one is definitely going to get simple," she said.
Finance Minister Arun Jaitley