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GST on fertilisers reduced from 12 per cent to 5 per cent ahead of roll-out, confirms Arun Jaitley
The Union Government made the landmark decision, to ensure that their prices do not rise and farmers' interests are protected.
New Delhi, June 30: The Goods and Service Tax (GST) Council on Friday evening, before launching the latest tax reform, decided to lower the tax rate on fertilisers from 12 per cent to 5 per cent. “Consensus in Council was to bring the rate down to 5% so that fertilizer price if at all comes down, it doesn’t go up,” said Finance Minister Arun Jaitley. The Union Government made the landmark decision, to ensure that their prices do not rise and farmers’ interests are protected.
Finance Minister Arun Jaitley while speaking to media said, “Within the government, some felt that the 12 per cent rate of GST (on fertilisers) may increase the burden on farmers, so the consensus withing the Council was to bring the rate down to 5 per cent”. Also Read – GST Roll Out Launch: What becomes ‘cheaper’ and what becomes ‘costlier’ from July 1
Some reports suggest that across some states, taxes on fertilisers are in the range of 0-6 per cent. A 12 per cent GST rate could have seen prices shooting up by Rs 30 to Rs 120 per bag of 50 kg on urea, diammonium phosphate (DAP) and potash, in states like Andhra Pradesh, Punjab and Haryana, where there is zero tax on soil nutrients.
The farmers across India and several of its unions had made several appeals to the fertilizer ministry to revise the GST rate to protect the interest of farmers. The farmers have kept their point saying that such a high tax rate would see their production costs shooting up significantly and affecting farmers adversely. Some reports also suggest that the government has a plan to double the income of farmers by 2022.
The launch of GST – one of the biggest tax reforms since India’s independence – will take place exactly at midnight of Friday and Saturday when the switchover to the new regime takes place. Some reports also claim that the GST launch timing matches with the ‘Tryst with Destiny” speech of India’s first Prime Minister Jawaharlal Nehru, which he delivered in the midnight of August 14th and 15th in 1947.
After the introduction of the GST, it is expected that it will add 2 per cent to the country’s GDP (gross domestic product). The ambitious tax reform is also expected to subsume around a dozen central and state taxes that are levied on goods and services.