In­verted duty struc­ture post-GST has fer­tiliser in­dus­try all worked up

Chemical Industry Digest - - News & Views -


fer­til­izer in­dus­try has ex­pressed its con­cerns in the wake of the GST roll­out due to the in­verted duty struc­ture.

Un­der the new GST regime, im­port of key raw ma­te­ri­als such as phos­phoric acid, am­mo­nia and sul­phur at­tracts 18 per­cent GST while the fi­nal prod­uct is taxed at 5 per­cent. On the other hand, im­ported DAP (di­ammo­nium phos­phate) at­tracts only 5 per­cent IGST (In­te­grated GST), which can be set off against the 5 per­cent GST on its sale in do­mes­tic mar­ket.

The im­pact of this on com­pa­nies with cap­tive phos­phoric acid ca­pac­i­ties (us­ing rock phos­phate for pro­duc­tion of phos­phoric acid) will be less harsh, since rock phos­phate at­tracts a 5 per­cent GST.

Satish Chan­dra, Di­rec­tor Gen­eral of the Fer­tiliser As­so­ci­a­tion of In­dia, said that the in­verted duty struc­ture has com­pounded the prob­lems of the in­dus­try, which is al­ready reel­ing un­der ad­verse cus­toms duty. The GST frame­work would lead to large-scale clo­sure of potash-based fer­tiliser-man­u­fac­tur­ing com­pa­nies and ex­pose the coun­try to the mo­nop­oly of in­ter­na­tional sup­pli­ers, he said.

The govern­ment, he said, should re­duce the tax on in­put for fer­tiliser man­u­fac­tur­ing to 5 per cent, which will avert the prob­lem of hav­ing to re­fund un­usu­ally huge ac­cu­mu­lated tax cred­its and shield the in­dus­try from a liq­uid­ity cri­sis.

The govern­ment should be prompt about mak­ing GST re­funds and fol­low the norms for re­fund­ing 90 per­cent of the money within seven days.

The ex­clu­sion of petroleum prod­ucts from GST would push up cost as the spend on nat­u­ral gas will not yield any credit for set-off, said De­ba­sish Ban­er­jee, CFO, Smartchem Tech­nolo­gies.

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