Fertilizer Association of India (FAI) has urged the governemnt to reduce GST on fertilizer inputs like ammonia and sulfuric acid to 5 percent from 18 percent. As fertilizer attracts 5 percent GST, this move will bring uniformity in tax rates for input material and the final product. In this context, a delegation of FAI comprising Dr. P.S. Gahlaut, Managing Director, Indian Potash Limited; Dr. Suresh Kumar Chaudhari, Director General, FAI and S. Sankarasubramanian, Co-Chairman, FAI, and Managing Director & CEO, Coromandel International Limited, met Union Minister of Finance, Nirmala Sitharaman on 26 August, 2025 says a press release issued by FAI.
FAI delegation requested the finance minister to reduce the GST rates on fertiliser raw materials (ammonia and sulphuric acid) from 18% to 5% and allow refund of accumulated ITC in fertiliser manufacturing and trading where accumulation is due to the non-taxable subsidy portion. The delegation also handed over a representation on behalf of the Industry highlighting these issues. Hon’ble Minister listened patiently, assured to examine the issues and take necessary actions in the matter.
Fertiliser industry has been facing vital problem related to GST. Towards this, it is to mention that P&K fertilisers attract GST rate of 5%. However, GST rates on inputs for manufacturing P&K fertilisers such as ammonia and sulphuric acid attract a GST rate of 18%, packing materials and other inputs at rates higher than 5%. Under the GST regime, subsidy has been excluded from the value of supply. As a result of lower rate of output GST than the rates of GST on some inputs, the output GST payable is much lower than the input GST credit, mainly due to subsidy. On account of subsidy being excluded from the taxable supply, fertiliser industry has huge amount of accumulated input tax credit. This huge blockade of unutilised Input Tax Credit is seriously impairing the working capital of the Industry and their ability to source raw materials and finished fertilisers in time. Therefore, the major concern is non-refund of unutilized input tax credit (ITC) due to fertiliser subsidy.