Indian fertiliser firms will benefit from a tax cut on fertiliser-grade phosphoric acid as the goods and services tax (GST) was reduced from 18% to 12%. ICRA chose to cut the rate, as the 18% duty on both phosphoric acid and ammonia, in combination with a 5% tax rate on fertilisers, was causing an increase in input tax credits for the industry. Manufacturers should now see a lower working-capital blockage, according to ratings agency The GST Council, but the industry prefers the tax for both phosphoric acid and ammonia to be reduced to 5% to remove the inverted duty structure.
Indian fertiliser firms will benefit from a tax cut on fertiliser-grade phosphoric acid as the goods and services tax (GST) was reduced from 18% to 12%. The GST Council chose to cut the rate, as the 18% duty on both phosphoric acid and ammonia, in combination with a 5% tax rate on fertilisers, was causing an increase in input tax credits for the industry. Manufacturers should now see a lower working-capital blockage, according to ratings agency ICRA, but the industry prefers the tax for both phosphoric acid and ammonia to be reduced to 5% to remove the inverted duty structure.