The fertilizer industry has huge amount of accumulated input tax credit due to subsidy being excluded from the taxable supply
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NAGARA GOPAL
The Fertilizer Association of India (FAI) has urged the Centre to bring Goods and Services Tax (GST) rate on ammonia and sulphuric acid, which are key raw materials in the production of di-ammonium phosphate (DAP) and complex (combination of nutrients) fertilisers, at par with their finished products at 5 per cent from the current 18 per cent.
A delegation of FAI, including P S Gahlaut, Managing Director of Indian Potash Ltd (IPL), S Sankarasubramanian, Managing Director and CEO of Coromandel International and Suresh Kumar Chaudhari, Director General of FAI, met Finance Minister Nirmala Sitharaman on August 26 and requested her to make the changes in next GST Council meeting.
Pointing out that Phosphorus (P) and Potash (K) fertilizers attracted 5 per cent GST, FAI said GST rates on inputs for manufacturing P&K fertilizers attract a GST rate of 18 per cent, packing materials and other inputs too are taxed at slabs above 5 per cent.
“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,” FAI said in a statement.
Accumulated credit
Further, it said the fertilizer industry has huge amount of accumulated input tax credit due to subsidy being excluded from the taxable supply, it said. Industry sources said that it could be about ₹5,500 crore if the government agrees for the refund.
“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 fertilizers in time,” FAI said.
Published on August 29, 2025