Relief for fertilizer companies as GST Council may clear refunds

Some relief to the fertiliser com- panies is on the cards as the GST Council is likely to recommend issuance of a circular for releasing refunds that are due as a result of inverted duty structure and sub- sidy. The Council is expected to meet after the general elections.

Inverted duty structure (IDS) refers to higher duty on input and lower duty on output. Fertilizer attracts 5 per cent GST while key inputs such as ammonia and packaging material attract 18 per cent leading to inverted duty structure. Although the govern- ment gives subsidy both on urea and P&K types of fertilizers, there are dierent mechanisms for computation -- key reason for accumulation of input tax credit and resultant refund.

Urea is provided to the farmers at a statutorily notified Maximum Retail Price (MRP) of Rs. 242 (45kg bag and (exclusive of charges towards neem coating and taxes as applicable). The difference between the delivered cost of urea at farm gate and net market real- isation by the urea units is given as subsidy to the urea manufac- turer/importer by the government under Nutrient Based Subsidy Policy. For Phosphatic and Potas- sic (P&K) Fertilizers a fixed amount of subsidy, decided on annual/semi-annual basis, is provided depending on their nutrient content. Under this policy, MRP is fixed by fertilizer companies as per market dynam- ics at reasonable level monitored by the government.

Source : https://www.pressreader.com/india/businessline-mumbai-9WVZ/20240529/281625310430437