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 government has also announced that it would provide incentives for farmers who grow crops such as sugarcane or jute, which are used in fertilisers but not sold commercially. 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.
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.