Good news for farmers
A great news has come out for the farmers. The direct benefit of change in the GST structure being made by the central government will now reach crores of farmers of the country. Essential items like tractor, agricultural equipment, irrigation means and fertilizer are now expected to be cheaper. Even before the 56th meeting of the GST Council, there are indications that a large tax can be cut on many goods related to the agricultural sector.
Farmers’s burden will decrease on the purchase of agricultural implements
Till now, farmers had to pay huge GST while buying tractors and related equipment, but according to new proposals, now the tractor will have only 5% GST. Not only this, reduction in tax rates on seed drills, thresher, harrow and other agricultural equipment is also possible. There is also a preparation to apply 5% GST on irrigation devices. This will reduce the cost of capital costs in farming and will provide relief to the farmers.
Compost ready to reduce tax will be cheaper
The central government is now considering a big demand related to the fertilizer industry. The Fertilization Association of India (FAI) has requested the government to reduce GST from 18% to 5% on ammonia and sulfuric acid. Both these chemicals are the main raw materials in the manufacture of dye-amonium phosphate (DAP) and mixed nutrient fertilizer.
FAI says that when there is only 5% GST on the prepared manure, 18% tax on input ie raw materials creates financial imbalance. This increases the input costs of companies and eventually this burden falls on farmers. If the government reduces tax on input, then the prices of fertilizer in the market may decrease, which will directly benefit the farmers.
Input tax credit became a big concern
FAI has also stated that due to high tax on input and low tax on output, companies have deposited a huge amount of input tax credit (ITC), which they are unable to use. According to the organization, this unused credit has reached about Rs 5,500 crore. If the government does not refund it, it can put pressure on the working capital of fertilizer companies and can cause timely interruption in production and supply.
Meeting of Finance Minister
Let me tell you that a delegation of FAI met Finance Minister Nirmala Sitharaman on 26 August and demanded a change in GST rates. In this delegation, Indian Potash Limited MD PS Gehlot, MD and CEO of Coromandel International S.K. Shankarasubramanian, and FAI Director General Suresh Kumar Chaudhary were included. He urged that a concrete decision should be taken on this in the GST Council meeting to be held on September 3-4.
FAI also told the government that the subsidy in the GST structure has been kept separate from the taxable supply, due to which there is a big difference between the input tax credit and the output tax. Due to this, the entire fertilizer industry is facing financial imbalance.