Finance Minister Yanamala Ramakrishnudu has written to the GST Council, urging it to take steps to fix the rate on key fertilizer inputs — phosphoric acid and ammonia — at 5% instead of 18%.
Pointing out that he requested the Centre to reduce the GST rate on fertilizers to 5% from the proposed 12% for the benefit of the farming community, Mr. Ramakrishnudu said that Andhra Pradesh was an agriculturally dominant economy with a major share of the population dependent on the activity for its livelihood. The proposed tax structure would have an adverse impact on the farming community besides impacting domestic fertilizer manufacturers, he felt.
The Finance Minister said phosphoric acid and ammonia were the major inputs in manufacture of phosphate fertilizers. These commodities were almost exclusively imported and were currently being exempted from levy of countervailing duty (CVD) as well as from levy of Special Additional Duty (SAD). However, the GST rate has been fixed at 18% for these inputs resulting in inverted duty structure for fertilizers, which attracts a GST of 12%. This would push up the cost of fertilizes produced domestically. The manufacturers would pass on the cost to the consumers, which discourages domestically produced fertilizers.
