Farmer sunflower
BLOOMS OF HOPE: A farmer inspects his sunflower crop near the city of Chandigarh in Punjab in this file photo. The GST Council's decision on Saturday to slash rates on fertiliser from 12 percent to 5 percent is expected to make prices of this vital agricultural input cheaper and benefit farmers to the tune of Rs 1,261 crore. REUTERS/Dipak Kumar

Union Minister for Chemicals and Fertilisers and Parliamentary Affairs Ananth Kumar said on Saturday that the government has decided to reduce the GST (Goods and Services Tax) rate on fertilisers from the existing 12 percent to 5 percent.

The decision was primarily taken in the interests of the farmers, he said. The government is also taking up with industry the question of passing on the benefits of the rate cut to farmers, the minister said.

Ananth Kumar was briefing reporters on the outcome of the 18th meeting of the GST Council, held on Friday, regarding the fertiliser sector.

Under the new rates announced by the GST Council, average weighted MRP will decrease to Rs 5,909 per tonne (or Rs 295.47 per 50 kg bag) as compared to the existing All India weighted Average of Rs 5,923 tonne (or Rs 296.18 per 50 kg bag).

Farmers will benefit to the tune of Rs 1,261 crore under the GST regime, Ananth Kumar said.

The GST regime is expected to deter inter-state smuggling of fertilisers by integrating the entire fertiliser market into a single market. Farmers will benefit to the tune of Rs 1,261 crore under the GST regime, Ananth Kumar said.

Following the advent of the GST regime, Ananth Kumar said, a uniform MRP of Rs 295.47 per 50 kg bag will be implemented across the country, except in a few states where additional VAT is charged on natural gas as natural gas has not been brought within the ambit of GST.

However, even in these states, MRP will reduce by Rs 3 per 50 kg bag. Similarly, MRPs of P&K (Phosphatic and Potassic) fertilisers, the prices of which are not administered, are also expected to come down on an average basis as incidence of tax will be lower than the existing tax on an average, the minister added.

The GST regime, apart from integrating the entire fertiliser market into a single entity, will also deter interstate smuggling of fertilisers which may be currently happening due to differing levels of taxes, and consequently, MRPs in different adjoining states.

The GST will realise Prime Minister Narendra Modi's vision of 'One Nation, One Market, One Tax', Ananth Kumar said.

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